UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-4315
ORANGE AND ROCKLAND UTILITIES, INC.
(Exact name of registrant as specified in its charter)
New York 13-1727729
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Blue Hill Plaza, Pearl River, New York 10965
(Address of principal executive offices) (Zip code)
(914) 352-6000
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
class of common stock, as of the close of the latest practicable
date.
Common Stock - $5 Par Value 13,654,668 shares
(Class) (Outstanding at July 31, 1997)
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets (Unaudited) at
June 30, 1997 and December 31, 1996 1
Consolidated Statements of Income (Unaudited)
for the three months and six months ended
June 30, 1997 and June 30, 1996 3
Consolidated Cash Flow Statements (Unaudited)
for the six months ended June 30, 1997
and June 30, 1996 5
Notes to Consolidated Financial Statements 6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 20
ITEM 5. Other Information 22
ITEM 6. Exhibits and Reports on Form 8-K 22
Signatures 23
PART I. FINANCIAL INFORMATION
Item I. Financial Statements
<TABLE>
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
Assets
<CAPTION>
June 30, December 31,
1997 1996
(Thousands of Dollars)
<S> <C> <C>
Utility Plant:
Electric $1,031,927 $1,023,796
Gas 222,990 219,712
Common 60,847 59,589
Utility Plant in Service 1,315,764 1,303,097
Less accumulated depreciation 457,917 440,333
Net Utility Plant in Service 857,847 862,764
Construction work in progress 54,714 36,879
Net Utility Plant 912,561 899,643
Non-utility Property:
Non-utility property 11,681 17,818
Less accumulated depreciation, depletion
and amortization 1,040 2,344
Net Non-utility Property 10,641 15,474
Current Assets:
Cash and cash equivalents 4,821 3,321
Temporary cash investments 520 1,289
Customer accounts receivable, less allowance for
uncollectible accounts of $2,391 and $2,391 54,706 60,992
Accrued utility revenue 20,442 22,773
Other accounts receivable, less allowance for
uncollectible accounts of $396 and $258 8,932 7,648
Materials and supplies (at average cost) 29,609 35,595
Prepaid property taxes 11,803 20,051
Prepayments and other current assets 39,136 21,540
Total Current Assets 169,969 173,209
Deferred Debits:
Income tax recoverable in future rates 73,896 74,198
Deferred revenue taxes 13,110 14,271
Deferred pension and other postretirement benefits 9,145 9,922
IPP settlement costs 19,425 24,065
Unamortized debt expense (amortized over term
of securities) 11,011 10,046
Other deferred debits 24,387 37,072
Total Deferred Debits 150,974 169,574
Total $1,244,145 $1,257,900
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
Capitalization and Liabilities
<CAPTION>
June 30, December 31,
1997 1996
(Thousands of Dollars)
<S> <C> <C>
Capitalization:
Common stock (13,654,783 & 13,654,121 shares
outstanding) $ 68,274 $ 68,271
Premium on capital stock 133,627 133,616
Capital stock expense (6,110) (6,097)
Retained earnings 169,461 192,060
Total 365,252 387,850
Non-redeemable preferred stock (428,443 shares
outstanding) 42,844 42,844
Non-redeemable cumulative preference stock
(11,723 and 12,180 shares outstanding) 382 397
Total Non-Redeemable Stock 43,226 43,241
Long-term debt 276,648 281,622
Total Capitalization 685,126 712,713
Non-current Liabilities:
Reserve for claims and damages 3,967 3,843
Postretirement benefits 14,802 15,213
Pension costs 39,761 37,421
Obligations under capital leases 1,721 -
Total Non-current Liabilities 60,251 56,477
Current Liabilities:
Notes payable and obligations due within one year 185,740 161,963
Accounts payable 51,593 67,449
Accrued Federal income and other taxes 1,267 1,024
Refundable fuel and gas costs 6,314 4,943
Refunds to customers 2,481 1,816
Other current liabilities 41,394 35,800
Total Current Liabilities 288,789 272,995
Deferred Taxes and Other:
Deferred Federal income taxes 185,418 185,156
Deferred investment tax credits 14,895 15,292
Accrued IPP settlement agreements - 2,000
Accrued Order 636 transition costs 1,390 11,620
Other deferred credits 6,419 7,983
Total Deferred Taxes and Other 208,122 222,051
Net Liabilities (Assets) of Discontinued
Operations (Note 8) 1,857 (6,336)
Total $1,244,145 $1,257,900
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Revenues:
Electric $111,879$120,772 $218,980$228,791
Gas 25,146 31,148 103,052 110,092
Total Utility Revenues 137,025 151,920 322,032 338,883
Diversified Activities 170 333 482 675
Total Operating Revenues 137,195 152,253 322,514 339,558
Operating Expenses:
Operations:
Fuel used in electric production 15,770 12,456 28,184 20,201
Electricity purchased for resale 14,004 18,291 32,860 44,227
Gas purchased for resale 13,800 18,011 61,917 65,648
Other expenses of operation 36,321 43,010 68,908 75,775
Maintenance 9,028 8,689 17,987 18,442
Depreciation and amortization 8,838 5,964 18,215 13,890
Taxes other than income taxes 23,435 25,002 49,587 50,844
Federal income taxes 2,931 3,366 10,394 11,049
Total Operating Expenses 124,127 134,789 288,052 300,076
Income from Operations 13,068 17,464 34,462 39,482
Other Income and (Deductions):
Investigation costs - (800) (3,390) (800)
Other - net 759 (2,486) 786 (2,300)
Taxes other than income taxes (66) (92) (132) (148)
Federal income taxes (19) 428 1,390 462
Total Other Income &(Deductions) 674 (2,950) (1,346) (2,786)
Income Before Interest Charges 13,742 14,514 33,116 36,696
Interest Charges:
Interest on long-term debt 6,011 5,867 12,161 12,103
Other interest 1,773 1,579 3,315 2,853
Amortization of debt premium,
expense-net 412 366 808 731
Allowance for borrowed funds used
during construction (165 (128) (393) (275)
Total Interest Charges 8,031 7,684 15,891 15,412
Income from Continuing Operations 5,711 6,830 17,225 21,284
</TABLE>
<TABLE>
(continued)
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
(continued)
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Discontinued Operations (Note 8):
Loss from discontinued operations
net of related income taxes (2,140) (510) (6,738) (409)
Estimated net loss on disposal of
discontinued operations (4,565) - (4,565) -
Loss with respect
to discontinued operations (6,705) (510) (11,303) (409)
Net Income (Loss) (994) 6,320 5,922 20,875
Dividends on preferred and preference
stock, at required rates 699 757 1,399 1,513
Earnings applicable to common stock $ (1,693)$ 5,563 $ 4,523$ 19,362
Avg. number of common shares
outstanding (000's) 13,654 13,654 13,654 13,654
Earnings Per Average Common Share
Outstanding:
Continuing Operations $ .37$ .45 $ 1.16$ 1.45
Discontinued Operations (.16) (.04) (.49) (.03)
Estimated net loss on disposal (.34) - (.34) -
Total $ (.13)$ .41 $ .33$ 1.42
Dividends declared per common share
outstanding $ 1.29$ 1.29 $ 1.94$ 1.94
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES
Consolidated Cash Flow Statements (Unaudited)
<CAPTION>
Six Months Ended
June 30,
1997 1996
(Thousands of Dollars)
<S> <C> <C>
Cash Flow from Operations:
Net income $ 5,922 $20,875
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 17,991 15,610
Deferred Federal income taxes (873) (717)
Deferred investment tax credit (397) (405)
Deferred and refundable fuel and gas costs 1,371 5,528
Allowance for funds used during constructio n (427) (284)
Other non-cash charges 2,000 2,470
Changes in certain current assets and liabilities:
Accounts receivable (net) and
accrued utility revenues 7,333 7,417
Materials and supplies 5,986 3,002
Prepaid property taxes 8,248 8,045
Prepayments and other current assets (17,596) (6,386)
Operating accounts payable (15,856) (14,660)
Accrued Federal Income and other taxes 243 (603)
Accrued interest (432) (464)
Refunds to customers 665 (11,019)
Other current liabilities (3,451) (2,006)
Discontinued operations 8,193 693
Other-net 11,901 7,339
Net Cash Provided from Operations 30,821 34,435
Cash Flow from Investing Activities:
Additions to plant (29,982) (20,423)
Temporary cash investments 769 (21)
Allowance for funds used during construction 427 284
Net Cash Used in Investing Activities (28,786) (20,160)
Cash Flow from Financing Activities:
Proceeds from:
Issuance of long-term debt 20,089 -
Retirements of:
Preference and preferred stock (1,390) -
Long-term debt (25,243) (139)
Capital lease obligations (129) (275)
Net borrowings (repayments) under
short-term debt arrangements* 25,181 3,950
Dividends on preferred and common stock (19,043) (19,126)
Net Cash Used in Financing Activities 535 (15,590)
Net Change in Cash and Cash Equivalents 1,500 (1,315)
Cash and Cash Equivalents at Beginning of Period 3,321 3,189
Cash and Cash Equivalents at End of Period $ 4,821 $ 1,874
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest, net of amounts capitalized $15,858 $14,788
Federal income taxes $10,000 $9,531
*Debt with maturities of 90 days or less.
The accompanying notes are an integral part of these statements.
</TABLE>
ORANGE AND ROCKLAND UTILITIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated balance sheet as of June 30, 1997, the
consolidated statements of income for the three month and
six month periods ended June 30, 1997 and 1996, and the
consolidated cash flow statements for the six month periods
then ended have been prepared by Orange and Rockland
Utilities, Inc. (the "Company") without an audit. In the
opinion of management, all adjustments (which include normal
recurring adjustments and the adjustments necessitated by
the discontinued operations) necessary to fairly present the
financial position and results of operations at June 30,
1997, and for all periods presented, have been made. The
amounts in the consolidated balance sheet as of December 31,
1996 have been derived from audited financial statements.
2. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been omitted.
It is suggested that these unaudited consolidated financial
statements, notes to consolidated financial statements and
the management's discussion and analysis of financial
condition and results of operations be read in conjunction
with the consolidated financial statements, the review of
the Company's results of operations and financial condition
and the notes to consolidated financial statements included
in the Company's December 31, 1996 Annual Report to
Shareholders. The results of operations for the period
ended June 30, 1997 are not necessarily indicative of the
results of operations for the full year.
3. The consolidated financial statements include the accounts
of the Company, all subsidiaries and the Company's pro rata
share of an unincorporated joint venture. All intercompany
balances and transactions have been eliminated.
4. Contingencies at June 30, 1997 are substantially the same as
the contingencies described in the "Notes to Consolidated
Financial Statements" included in the Company's December 31,
1996 Annual Report to Shareholders, which material is
incorporated by reference to the Company's December 31, 1996
Form 10-K Annual Report, and in Item 3, Legal Proceedings of
the Company's Form 10-K Annual Report for the fiscal year
ended December 31, 1996, except changes in the status of
regulatory matters which are updated in Part I, Item 2 under
the caption "Rate Activities" and the status of certain
Legal Proceedings which are updated in Part II, Item I,
"Legal Proceedings".
5. In February 1997, the Financial Standards Board issued
Statement of Financial Accounting Standards No. 128,
"Earnings per Share" ("SFAS No. 128"). This statement
simplifies the computation of earnings per share ("EPS").
Basic EPS includes no dilution and is computed by dividing
income available to common stockholders by the weighted-
average number of common shares outstanding for the period.
SFAS No. 128 will be effective for financial statements for
periods ending after December 15, 1997, and the Company
plans to adopt the statement for year-end 1997. If adopted
currently, SFAS No. 128 would have a negligible impact on
the Company's reported EPS.
6. The Company experienced a major storm on April 1, 1997. On
June 27, 1997, the Company filed a petition with the New
York Public Service Commission ("NYPSC") to defer and
recover the $2.8 million of incremental costs incurred
during this event. The Company has deferred these charges
pending final resolution by the NYPSC.
7. The Company has entered into a strategic alliance with US
Generating Company, an independent power production company
based in Bethesda, MD. This alliance, the terms of which
are set forth in agreements dated as of May 1, 1997, is
primarily designed to expand the wholesale markets for the
Company's excess generation and create operating
efficiencies and market penetration unattainable by each
company individually.
8. NORSTAR Management, Inc. ("NMI"), a wholly-owned indirect
subsidiary of the Company has solicited bids to sell certain
of the assets of NORSTAR Energy Limited Partnership
("NORSTAR"),a natural gas services and marketing company of
which NMI is the general partner. The assets to be sold
consist primarily of customer contracts and accounts
receivable. NMI's plans call for winding up the remaining
portion of the NORSTAR business prior to December 31, 1997.
In accordance with Accounting Principles Board Opinion No.
30, the financial results for this segment are reported as
"Discontinued Operations." The total losses related to
discontinued operations were $(6,705,222)and $(509,970) for
the quarters ended June 30,1997 and June 30, 1996,
respectively. The 1997 loss includes an estimated loss of
$(4,565,370) to be incurred in connection with the disposal
of the NORSTAR business. The impact of NORSTAR as reported
in "Discontinued Operations" is as follows:
Three Months Ended June 30,
1997 1996
Gross Revenue $16,176,631 $60,474,049
Cost and Expenses 20,409,473 61,336,409
Loss Before Income Taxes (4,232,842) (862,360)
Provision for Taxes (2,092,990) (352,390)
Loss from Discontinued
Operations (2,139,852) (509,970)
Estimated Loss on Disposal
(net of tax benefits
of $751,495) (4,565,370) -
Total Loss Related to
Discontinued Operations $(6,705,222) $ (509,970)
June 30, 1997 Dec. 31, 1996
Assets:
Current Assets $17,416,665 $49,515,807
Fixed Assets 2,426,178 1,532,565
Other Assets 1,715,041 2,416,712
Total Assets 21,557,884 53,465,084
Liabilities:
Current Liabilities 22,480,513 46,054,645
Other Liabilities 934,565 1,073,987
Net Liabilities (Assets)
of Discontinued Operations $ 1,857,194 $(6,336,452)
9. On July 18, 1997 the Company filed a petition with the NYPSC
for approval to repurchase up to 700,000 shares of its
common stock and to issue up to $25 million of unsecured
debt obligations. The proceeds from the issuance of debt
will be used to finance the common stock purchase. If the
petition is approved, the Company will repurchase stock from
time to time, not later than December 31, 1999 in the open
market or through privately negotiated transactions.
10. An indirect subsidiary of the Company, Millbrook Holdings,
Inc.("Millbrook"), pursuant to a long-term leasehold
agreement, holds for sale or lease, approximately twelve
acres of non-utility real estate in Morris County, New
Jersey. In June 1997 the Company wrote off the land leased
by Millbrook. The impact of this write-off resulted in an
after tax charge to income of $(563,000).
11. On April 24, 1997, O&R Development Inc., a land development
subsidiary of the Company, completed the sale of one of its
buildings located in Harriman, New York to Kingston Realty
Group LLC. The sale produced net income after tax of
$465,000.
12. The Company and the members of Local 503 of the
International Brotherhood of Electrical Workers have agreed
to a new labor contract effective June 1, 1997. Under the
terms of the contract, bargaining unit wages will increase
by 10 percent over the three-year period covered by the
agreement. The agreement calls for pension plan and other
retirement-related improvements as well as employee
contributions for health care costs and work rule changes
which will essentially offset the cost increases.
13. Certain amounts reported for the prior year have been
reclassified to conform with the current year presentation.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Financial Condition:
Financial Performance
The Company's consolidated earnings per average common share
outstanding from continuing operations for the second quarter of
1997 were $0.37 as compared to $0.45 for the second quarter of
1996. The Company's consolidated earnings per average common
share outstanding from discontinued operations for the second
quarter of 1997 were $(0.50) as compared to $(0.04) for the
second quarter of 1996. The Company's combined total consolidated
earnings per average common share outstanding for the second
quarter of 1997 were $(0.13) as compared to $0.41 for the second
quarter of 1996. Fluctuations within the components of earnings
are discussed in the "Results of Operations". The average number
of common shares outstanding were 13.7 million for the three and
six month periods of both 1997 and 1996.
The current quarterly dividend rate of $0.645 is equivalent to an
annual dividend rate of $2.58 per share. Dividends declared
during the twelve months ended June 30, 1997 amounted to $2.58
with a dividend payout ratio of 124.0% as compared to $2.58 a
year ago with a payout ratio of 94.5%. The dividend payout ratio
excluding discontinued operations was 85.4% and 91.8%,
respectively, for the twelve months ended June 30, 1997 and 1996.
The return on average common equity for the twelve months ended
June 30, 1997 was 7.45% as compared to 9.84% for the twelve
months ended June 30, 1996.
Capital Resources and Liquidity
At June 30, 1997, the Company and its utility subsidiaries had
unsecured bank lines of credit totaling $110 million. The
Company may borrow under the lines of credit through the issuance
of promissory notes to the banks. The Company, however, utilizes
such lines of credit to fully support commercial paper
borrowings. The aggregate amount of borrowings through the
issuance of promissory notes and commercial paper cannot exceed
the aggregate lines of credit. In addition, a non-utility
subsidiary had a line of credit that provided for borrowing based
on the availability of collateral which, at June 30, 1997,
amounted to $2,370,000. The average daily balance of short-term
borrowings for the six months ended June 30, 1997 amounted to
$95.1 million at an effective interest rate of 5.7% as compared
to $58.9 million at an effective interest rate of 5.8% for the
same period of 1996. The average daily balance of temporary cash
investments for the six months ended June 30, 1997 was $1.0
million with an effective interest rate of 5.2% compared to $1.4
million at an effective interest rate of 5.4% for the same period
of 1996.
The NYPSC has authorized the Company to issue up to 750,000
shares of common stock under its Dividend Reinvestment and Stock
Purchase Plan ("DRP") and its Employee Stock Purchase and
Dividend Reinvestment Plan ("ESPP"). Under an option of the
Company, common stock used to satisfy the requirements of the DRP
and ESPP is being purchased by the agent under the plans on the
open market.
On July 18, 1997, the Company filed a petition with the NYPSC for
approval to repurchase up to 700,000 shares of its common stock
and to issue up to $25 million of unsecured debt obligations. If
the petition is approved, the Company will repurchase stock from
time to time, not later than December 31, 1999 in the open market
or through privately negotiated transactions. The proceeds of
the debt issue will be used to provide funds for the common stock
repurchase. The Company currently has no other plans for the
issuance of additional debt or equity securities, with the
exception of the expected refinancing of $78 million of long-term
debt which will mature during 1997. It is expected that all
other capital requirements will be met with funds from
operations, supplemented with short-term debt as required.
Rate Activities
New York
The Company and the Staff of the NYPSC entered into a settlement
agreement("Orange and Rockland Agreement")on March 25, 1997 in
Case 96-E-0900, the NYPSC Competitive Opportunities Proceeding.
Reference is made to the Company's Form 8-K dated March 25, 1997
for a discussion of the Orange and Rockland Agreement.
On July 2, 1997, the Administrative Law Judge ("ALJ") issued his
recommended decision in this proceeding. The ALJ recommended
that the NYPSC not approve the Orange and Rockland Agreement as
submitted. Although the ALJ supported the Orange and Rockland
Agreement's retail access implementation schedule and the
proposed rate reductions, he was critical of the proposed
corporate restructuring provisions of the Agreement, the proposed
increase in return on equity revenue sharing threshold and
operation of the stranded cost recovery mechanism. Under the
current schedule, the Company anticipates that the NYPSC will
rule on the Orange and Rockland Agreement in September 1997. The
Company is unable to predict the outcome of the NYPSC proceeding
or its effect on the Company's consolidated financial position or
results of operations, if any.
On June 5, 1997, the NYPSC issued an Order Requiring the
Filing of Proposals to Ameliorate Gas Price Volatility and
Requesting Comments in Case 97-G-0600, In the Matter of the
Commission's Request for Gas Distribution Companies to
Reduce Gas Cost Volatility and Provide for Alternative Gas
Purchasing Mechanisms. Under the Order, gas utilities in
New York are required to submit proposals for fixed price
gas sales options to be available for use by all customers
during the 1997-1998 heating season. In addition, the NYPSC
directed the utilities to review their gas procurement
practices and to develop an acquisition strategy to include
a mix of purchase options comprised of, but not limited to,
indices, spot purchases and financial transactions with a
view toward fostering gas price stability.
On August 4, 1997, the Company filed a multi-part proposal
in response to the NYPSC's Order. The proposal provides for
the Company to use financial derivatives to hedge an
unspecified portion of its system gas supply for the
upcoming winter with the costs associated with the hedging
activity to be recovered by the Company through its gas
adjustment clause. The proposal also includes a new tariff
which would allow the Company to negotiate the commodity
price of gas with its larger customers. The Company
anticipates a ruling on its filing prior to December, 1997.
The Company's filing may be accepted or significantly
modified by the NYPSC before becoming effective. It is not
possible to predict the outcome of this proceeding or its
effect on the Company's consolidated financial position or
results of operations.
New Jersey
On April 30, 1997, the New Jersey Board of Public Utilities
("NJBPU") issued an order "Adopting and Releasing Final Report in
its Energy Master Plan Phase II Proceeding to Investigate the
Future Structure of the Electric Power Industry (Docket No. EX
94120585Y)." The Order required the Company's subsidiary,
Rockland Electric Company ("RECO"), and other New Jersey investor
owned electric utilities each to file unbundled rates, a stranded
cost proposal and a restructuring plan by July 15, 1997. As part
of its stranded cost proposal, the NJBPU has recommended that
each utility should provide a 5-10% rate reduction.
RECO's filing was made on July 15, 1997. The filing includes a
Restructuring Plan, a Stranded Costs Filing and an Unbundled
Rates Filing. The Restructuring Plan calls for RECO to remain a
regulated transmission and distribution company within a
registered holding company structure. Standards of Conduct and
Affiliate Rules have been proposed in order to promote effective
competition and ensure that regulated operations do not subsidize
unregulated operations. RECO has proposed to implement full
retail competition (energy and capacity) for all customers by May
1, 1999. Under this schedule, full retail access will be
achieved 13 months ahead of the NJBPU's proposed phase-in
schedule.
In its Stranded Costs Filing, RECO has identified two categories
of potential stranded costs: generation investment and power
purchase contracts with non-utility generators ("NUGS"). RECO
proposes to recover stranded generation investment through
regulated delivery rates by means of a two-part Market Transition
Charge ("MTC"). The MTC would be in effect for an initial four
year period during which RECO would recover 90-100% of its annual
stranded costs. At the end of the four year period, a market
valuation of the generation assets would be performed. Any
difference between market and net book value then would be
recovered over an appropriate period of time. Stranded NUG
contract payments are proposed to be recovered over the remaining
life of the contracts through the MTC. RECO has proposed to
reduce its annual net revenue (revenue net of fuel, purchased
power and gross receipts taxes) by $4.7 million or 5.6% effective
in October 1998.
RECO also made an Unbundled Rates Filing which separates the
components of existing tariffs into production, transmission,
distribution and customer cost categories. The Unbundled Rates
Filing would serve as the basis to segregate the costs of the
generation function from rates in order to facilitate customer
choice. In addition, the MTC mechanism would be added to the
existing rate structure to allow for recovery of stranded costs,
and a non-bypassable societal benefits charge would be created as
a billing mechanism for mandated public policy programs.
The NJBPU has indicated that it will rule on these filings by
October 1998. RECO's filing may be accepted or significantly
modified by the NJBPU before becoming effective. It is not
possible to predict the outcome of the NJBPU proceeding or its
effect on the Company's consolidated financial position or
results of operations.
QUARTERLY COMPARISON
Results of Operations
The Company's total consolidated earnings per average common
share outstanding for the second quarter of 1997 were $(0.13) as
compared to $0.41 for the second quarter of 1996.
The majority of this quarter's decline resulted from the
operating losses incurred by NORSTAR and the estimated loss to
dispose of NORSTAR's discontinued operations. The earnings
decrease from continuing operations was the result of lower
revenue, higher short-term interest charges and lower income from
other diversified activities.
Electric and Gas Revenues
Electric and gas operating revenues, including fuel cost and
purchased gas cost recoveries, decreased by $14.9 million during
the second quarter of 1997 as compared to the same quarter of
1996, as a result of the timing of fuel cost recoveries and the
regulatory adjustments, recorded in the second quarter of 1996
required by the May 3, 1996 NYPSC Order issued by the NYPSC in
Cases 95-E-0491 and 93-6-0779, ("May 3, 1996 Order").
Electric operating revenues during the current quarter were
$111.9 million as compared to $120.8 million for the second
quarter of 1996. The 1996 revenues also reflect the regulatory
adjustments required by the NYPSC's May 3, 1996 Order. The
timing of fuel cost recoveries and lower base rate revenues also
contributed to this decrease.
Total sales of electric energy to retail customers during the
second quarter of 1997 were 1,107,458 megawatt hours ("Mwh"),
compared with 1,103,959 Mwh during the comparable period a year
ago. Revenues from these sales were $110.5 million for the
second quarter compared with $107.5 million for the same period
in 1996. The 1996 revenues reflect the impact of the Company's
Revenue Decoupling Mechanism ("RDM") then in effect. In
accordance with the NYPSC's May 3, 1996 Order, electric revenues
are no longer governed by an RDM agreement. Sales to other
utilities for the second quarter of 1997 amounted to 29,589 Mwh
with revenues of $0.6 million compared to 34,172 Mwh and $0.5
million in 1996. Revenue from these sales are primarily a
recovery of costs, and under the applicable tariff regulations,
have a minimal impact on earnings.
Gas operating revenues during the second quarter of 1997 were
$25.1 million compared to $31.1 million for the second quarter of
1996. This decrease is primarily the result of lower gas cost
recoveries.
Sales to firm customers totaled 3,081 million cubic feet
("Mmcf"), compared with 3,169 Mmcf during the same period a year
ago. Gas revenues from firm customers were $21.1 million,
compared with $25.3 million in the second quarter of 1996.
Interruptible gas sales were 844 Mmcf for the second quarter of
1997 compared to 886 Mmcf for the same period of 1996. Revenues
from interruptible customers were $3.0 million in 1997 compared
to $3.4 million in 1996.
Fuel, Purchased Electricity and Purchased Gas Costs
The cost of fuel used in the production of electricity and
purchased electricity costs decreased by $1.0 million during the
second quarter of 1997 when compared to the same quarter of 1996.
This decrease reflects the lower cost of fuel used in generation
and lower purchased power costs.
Purchased gas costs for utility operations were $13.8 million in
the second quarter of 1997 compared to $18.0 million in 1996, a
decrease of $4.2 million. This decrease is the result of
decreases in the cost of purchased gas coupled with a decrease in
the volume of gas purchased for resale and deferred costs.
Other Operating and Maintenance Expenses
The Company's total operating and maintenance expenses excluding
fuel, purchased power and gas purchased for resale for the second
quarter decreased by $5.5 million compared with the same period
in 1996. Utility operating expenses decreased $6.2 million.
Diversified operating expenses increased by $0.7 million.
The net decrease in utility operating and maintenance expenses of
$6.2 million is primarily the result of the implementation of the
May 3, 1996 NYPSC Order, which, among other things, provided for
the elimination of substantially all of the expense
reconciliation items under the previously mandated Revenue
Decoupling Mechanism and the recognition of a higher level of
Independent Power Producer contract termination costs in the
second quarter of 1996. Additionally, depreciation expense
increased in the current period as a result of a regulatory
adjustment made in the second quarter of 1996 which resulted in a
temporary reduction in depreciation expense and tax expense
decreased by $1.8 million, primarily as a result of decreased
property and revenue taxes.
Diversified Activities
The Company's diversified activities, excluding the discontinued
gas marketing operations, consist of energy related services and
business ventures and land development conducted through wholly-
owned non-utility subsidiaries.
Revenues from continuing diversified activities decreased by
$163,000 for the second quarter compared with the same period in
1996.
The net loss resulting from the discontinued operations of
NORSTAR amounted to $6.7 million or 50 cents per average common
share outstanding during the second quarter of 1997 compared to a
loss of $0.5 million or 4 cents per share during the second
quarter of 1996.
Other Income, Deductions and Interest Charges - Net
Other income, net of interest charges and other deductions,
increased by $3.3 million during the second quarter of 1997 when
compared to the same quarter of 1996 as a result of reversals on
cumulative RDM balances and lower investigation costs, partially
offset by higher interest charges.
YEAR TO DATE COMPARISON
Results of Operations
Earnings per average common share outstanding from continuing
operations for the first half of 1997 amounted to $1.16 per share
as compared to $1.45 per share for the first six months of 1996.
Earnings per average common share outstanding from discontinued
operations for the first half of 1997 amounted to $(0.83) per
share as compared to $(0.03) per share for the first six months
of 1996. The Company's combined total consolidated earnings per
average common share outstanding for the first half of 1997 were
$0.33 as compared to $1.42 for the first half of 1996.
The majority of this year's decline was the impact of the
operating losses incurred by NORSTAR's gas marketing activities
and the estimated loss to dispose of NORSTAR's discontinued
operations.
The six-month decrease in earnings from continuing operations is
primarily the result of lower energy sales during the mild winter
and the balance of costs associated with the arbitration
settlement with the Company's former Chief Executive Officer in
February 1997.
Electric and Gas Revenues
Electric and gas operating revenues, including fuel cost and
purchased gas cost recoveries, decreased by $16.9 million in the
first six months of 1997 as compared to the same period of 1996.
Electric operating revenues during the current period were $219.0
million as compared to $228.8 million for the first six months of
1996, a decrease of $9.8 million. This decrease is the result of
regulatory adjustments required by the May 3, 1996 NYPSC Order
approving the settlement agreement in the Company's electric and
investigation cases as well as decreased sales and the timing of
fuel cost recoveries.
Actual total sales of electric energy to retail customers during
the first six months of 1997 were 2,224,176 Mwh, compared to
2,232,657 Mwh during the comparable period a year ago. This
decrease is attributable to decreased usage when compared to the
same period a year ago. Revenues from these sales during the
first six months of 1997 were $215.2 as compared to $215.7 for
the same period in 1996. The 1996 revenues reflect the impact of
the Company's RDM then in effect. In accordance with the NYPSC's
May 3, 1996 Order electric revenues are no longer governed by an
RDM agreement. Sales to other utilities for the first six months
of 1997 amounted to 97,513 Mwh with revenues of $2.1 million
compared to 71,664 Mwh and $1.0 million in 1996.
Gas operating revenues during the first six months of 1997 were
$103.1 million compared to $110.1 million for the first six
months of 1996, a decrease of $7.0 million. Revenues were
decreased by lower gas cost recoveries and lower sales volumes
from a mild winter.
Gas sales to firm customers during the first six months of 1997
totaled 12,077 Mmcf, compared with 13,112 Mmcf during the same
period a year ago. Gas revenues from firm customers were $93.7
million, compared with $98.1 million in the first six months of
1996.
Fuel, Purchased Electricity and Purchased Gas Costs
The cost of fuel used in the production of electricity and
purchased electricity costs decreased by $3.4 million during the
first six months of 1997 when compared to the same period of
1996. This decrease reflects the decrease in the cost of fuel
and purchased power offset by increased demand.
Purchased gas costs for utility operations were $61.9 million in
the first six months of 1997 compared to $65.6 million in 1996, a
decrease of $3.7 million. This decrease in gas costs is
attributable to a lower volume of gas purchased for resale offset
by higher prices.
Other Operating and Maintenance Expenses
The Company's total operating and maintenance expenses, excluding
fuel, purchased power and gas purchased for resale for the first
six months of 1997 decreased by $4.9 million compared with the
same period in 1996. The decrease in expenses associated with
utility operating expenses amounted to $5.8 million. The change
in diversified operation and maintenance expenses was an increase
of $0.9 million.
The net decrease in utility operating expenses is primarily the
result of the implementation of the provisions of the May 3, 1996
NYPSC Order, which, among other things, provided for the
elimination of substantially all of the expense reconciliation
items under the previously mandated RDM and the recovery of
Independent Power Producer contract termination costs. In
addition, depreciation expense increased because of a regulatory
adjustment made in the first quarter of 1996 which resulted in a
temporary reduction in depreciation expense.
Diversified Activities
Revenues from diversified activities decreased by $193,000 for
the first six months of 1997 as compared to the same period of
1996. Revenues for 1996 have been restated to exclude the
discontinued operations and estimated loss on disposal of
NORSTAR.
The net loss resulting from the discontinued operations of
NORSTAR amounted to $11.3 million or 83 cents per average common
share outstanding during the first six months of 1997 compared to
a loss of $0.4 million or 3 cents per share during the same
period in 1996.
Other Income, Deductions and Interest Charges - Net
Other income, net of interest charges and other deductions,
increased by $1.0 million during the first six months of 1997
when compared to the same period of 1996. The increase reflects
the impact of the reversals of RDM balances and the increase in
investigation costs associated with an arbitration settlement,
signed in February 1997, with a former Chief Executive Officer.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Reference is made to Item 3, Legal Proceedings, in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1996 and to Item I, Legal Proceedings, in the Company's Quarterly
Report on Form 10-Q for the quarterly period ended March 31,
1997, for a description of the litigation entitled Crossroads
Cogeneration Corporation v. Orange and Rockland Utilities, Inc.
By Opinion and Order ("Order") dated June 30, 1997, the Court
dismissed Crossroads' Complaint in its entirety with prejudice
and dismissed Crossroads cross-motion for partial summary
judgment as moot. On July 23, 1997, Crossroads filed an appeal
from the Order.
Reference is made to Item 3, Legal Proceedings, in the Company's
Annual Report on Form 10-K for the fiscal year ended December
31,1996 for a description of the litigation entitled Town of
Wallkill and State of New York v. Tesa Tape, Inc., et al. On
July 23, 1997 the Company reached a settlement in principle with
the State of New York which, if finalized and approved by the
Court, will result in the Company being dismissed from this
litigation. Pursuant to the settlement in principle, the Company
will pay $125,000 to the State of New York and the State will
release the Company, dismiss the litigation and will grant
"contribution protection" as to the pending third-party claims
and cross-claims asserted by other potentially responsible
parties. The settlement will be subject to certain standard
limited re-openers. The settlement is in the process of being
documented and will be subject to approval of the Court.
Reference is made to Item 3, Legal Proceedings, in the Company's
Annual Report on Form 10-K for the fiscal year ended December
31,1996 for a description of a remedial investigation of a
property owned by the Company in West Nyack, New York. The
Company estimates that the remediation related to the
contamination of soils for the West Nyack site will cost
approximately $1.5 million. This amount has been deferred in the
Company's financial statements as approved by the May 3, 1996
NYPSC Order. In addition, the New York State Department of
Environmental Conservation will separately address the potential
remediation related to groundwater contamination at a later date.
The Company does not believe that this matter will have a
material effect on the financial condition of the Company.
Reference is made to Item 3, Legal Proceedings, in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1996, and to Item 5, Other Events, in the Company's Current
Report on Form 8-K dated March 25, 1997, for a description of the
New York Public Service Commission ("NYPSC") Competitive
Opportunities Proceeding (Case Nos. 94-E-0952 and 96-E-0900), and
a Settlement Agreement entered into on March 25, 1997 between the
Company and the Staff of the NYPSC in Case No. 96-E-0900 and to
Item 2, Management's Discussion and Analysis of Financial
Condition and Results of Operations, in this Form 10-Q Quarterly
Report for a description of the Administrative Law Judge's
recommended decision in this proceeding issued on July 2, 1997.
The Company is unable to predict the outcome the NYPSC proceeding
or its effect on the Company's consolidated financial position or
results of operations.
Reference is made to Item 3, Legal Proceedings, in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1996 for a description of the New Jersey Board of Public
Utilities ("NJBPU") Energy Master Plan proceedings and to Item 2,
Management's Discussion and Analysis of Financial Condition and
Results of Operations, in this Form 10-Q Quarterly Report for a
description of the April 30, 1997 NJBPU Order Adopting and
Releasing Final Report in its Energy Master Plan Phase II
Proceeding to Investigate the Future Structure of the Electric
Power Industry (Docket No. EX94120585Y) and the filing made by
the Company's subsidiary, Rockland Electric Company on July 15,
1997 in response thereto. It is not possible to predict the
outcome of the NJBPU proceeding or its effect on the Company's
consolidated financial position or results of operations.
Reference is made to Item 2, Management's Discussion and
Analysis of Financial Condition and Results of Operations,
in this Form 10-Q Quarterly Report for a description of the
June 5, 1997 NYPSC Order Requiring the Filing of Proposals
to Ameliorate Gas Price Volatility and Requesting Comments
(Case 97-G-0600) and the filing made by the Company on
August 4, 1997, in response thereto. It is not possible to
predict the outcome of this proceeding or its effect on the
Company's consolidated financial position or results of
operations.
Item 5. Other Information
On August 8, 1997, the Company issued a press release announcing
the departure of the Company's President and Chief Operating
Officer. A copy of the press release is attached as an Exhibit
to this Form 10-Q Quarterly Report and is incorporated herein by
reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
+10.11 Officers' Supplemental Retirement Plan, as amended
and restated on June 5, 1997 effective July 1,
1997.
+10.20 Orange and Rockland Utilities, Inc. Post Director
Service Retainer Continuation Program, as amended
on June 5, 1997 and restated effective July 1,
1997.
+10.40 Long-Term Performance Share Unit Plan as amended
effective July 1, 1997.
+10.48 Eligible Employees' Insurance Program, effective
July 1, 1997.
99.6 Press Release dated August 8, 1997.
+ Denotes executive compensatory plans and
arrangements.
(b) Reports on Form 8-K
On June 17, 1997, the Company filed a Current Report on Form
8-K dated June 17, 1997 relating to a press release of the
Company dated June 17, 1997.
On July 1, 1997, the Company filed a Current Report on Form
8-K dated July 1, 1997 relating to a press release of the
Company dated July 1, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ORANGE AND ROCKLAND UTILITIES, INC.
(Registrant)
Date: August 8, 1997 By ROBERT J. McBENNETT
Robert J. McBennett
Treasurer
Date: August 8, 1997 By EDWARD M. McKENNA
Edward M. McKenna
Controller
SIGNATURES
OFFICERS' SUPPLEMENTAL RETIREMENT PLAN OF
ORANGE AND ROCKLAND UTILITIES, INC.
As Amended and Restated Effective July 1, 1997
OFFICERS' SUPPLEMENTAL RETIREMENT PLAN OF
ORANGE AND ROCKLAND UTILITIES, INC.
Section 1. PURPOSE
The purpose of the Officers' Supplemental Retirement Plan of
Orange and Rockland Utilities, Inc. (the "Plan") is to provide
additional retirement benefits to Orange and Rockland Officers
above that which they might earn from the Employees' Retirement
Plan of Orange and Rockland Utilities, Inc. (the "Qualified
Plan"), given limitations upon benefits and covered compensation
under the Qualified Plan imposed by the Internal Revenue Code of
1986, as amended (the "Code"). The Plan has been intentionally
structured to benefit those Officers whose careers at Orange and
Rockland have been too short to accumulate appropriate retirement
benefits from the Qualified Plan. Benefits payable from the Plan
will be offset by payments from the Qualified Plan.
The Plan as amended and restated herein shall apply to Officers
terminating from service on or after July 1, 1997.
Section 2. DEFINITIONS
(1) "Affiliated Company" shall mean any corporation which is a
member of a controlled group of corporations (within the
meaning of Section 1563(a), determined without regard to
Section 1563(a)(4) and (e)(3)(C) of the Code) of which the
Company is also a member.
(2) "Allowance" shall mean a monthly benefit computed in
accordance with Section 6.
(3) "Beneficial Owner" shall have the meaning set forth in
Rule 13d-3 under the Exchange Act.
(4) "Beneficiary" shall mean the person or persons designated by
the Member, in writing filed with the Committee, to receive
any Allowance payable hereunder to a Beneficiary; provided,
however, that if the Participant has a spouse, the spouse
shall be the Participant's Beneficiary unless the spouse
consents in a notarized writing, on a form provided by or
acceptable to the Committee or its designee, to the
designation of the non-spouse Beneficiary. A designation of
Beneficiary may be revoked or changed by filing a new
designation of Beneficiary with the Committee prior to
death, subject to the spousal consent requirements set forth
in the preceding sentence. In the event of a failure to
designate a Beneficiary or if the designated Beneficiary
dies prior to receipt of payment, the Beneficiary shall be
deemed to be the Member's spouse; or if none, the Member's
then living issue, per stirpes; or if none, the estate of
the Member or Contingent Annuitant, whoever is the last to
die. With respect to any Allowance payable to a Contingent
Annuitant which has a guaranteed payment period, the Member,
in a writing filed with the Committee, is permitted to
authorize the Contingent Annuitant to designate, or change
the designation of, the Beneficiary for the continued
payments which would be made in the event of the death of
the Contingent Annuitant prior to the expiration of the
guaranteed payment period.
(5) "Board" shall mean the Board of Directors of Orange and
Rockland Utilities, Inc.
(6) "Change in Control" shall mean any one of the following
events:
(A) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not including
in the securities beneficially owned by such Person any
securities acquired directly from the Company or its
affiliates other than in connection with the acquisition by
the Company or its affiliates of a business) representing
20% or more of either the then-outstanding Company Common
Stock, $5 par value per share (or any successor common
stock) ("Shares") or the combined voting power of the
Company's then-outstanding securities;
(B) the following individuals cease for any reason to
constitute a majority of the number of Directors then
serving: individuals who, on April 1, 1997, constituted the
Board of Directors of the Company and any new Director
(other than a Director whose initial assumption of office is
in connection with an actual or threatened election contest,
including, but not limited to, a consent solicitation,
relating to the election of Directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A under
the Exchange Act)) whose appointment or election by the
Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds
(2/3) of the Directors then still in office who either were
Directors on April 1, 1997 or whose appointment, election or
nomination for election was previously so approved;
(C) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation or
approve the issuance of voting securities of the Company in
connection with a merger or consolidation of the Company (or
any direct or indirect subsidiary of the Company) pursuant
to applicable stock exchange requirements, other than (1) a
merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either
by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof),
in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan
of the Company, at least 65% of the combined voting power of
the voting securities of the Company or such surviving
entity or any parent thereof outstanding immediately after
such merger or consolidation, or (2) a merger or
consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no Person is
or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company or its affiliates other than in
connection with the acquisition by the Company or its
affiliates of a business) representing 20% or more of either
the then-outstanding Shares or the combined voting power of
the Company's then-outstanding securities; or
(D) the shareholders of the Company approve a plan of
complete liquidation or dissolution of the Company or an
agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets, other than a
sale or disposition by the Company of all or substantially
all of the Company's assets to an entity, at least 65% of
the combined voting power of the voting securities of which
are owned by Persons in substantially the same proportions
as their ownership of the Company immediately prior to such
sale.
Notwithstanding the foregoing, no "Change in Control" shall
be deemed to have occurred if there is consummated any
transaction or series of integrated transactions immediately
following which the record holders of Shares immediately
prior to such transaction or series of transactions continue
to have substantially the same proportionate ownership in an
entity which owns all or substantially all of the assets of
the Company immediately following such transaction or series
of transactions.
(7) "Committee" shall mean the Retirement Committee of Orange
and Rockland Utilities, Inc.
(8) "Company" shall mean Orange and Rockland Utilities, Inc. and
any successor to its business or assets; and, except with
respect to the definitions of "Change in Control" and
"Potential Change in Control", shall also mean any other
company participating in the Plan as provided in Section 3
with respect to its Officers.
(9) "Compensation" shall mean the regular rate of remuneration
paid to an Officer by the Company, excluding any bonuses,
overtime or other special pay, and excluding the Company's
cost for any public or private employee benefit plan,
including the Plan, but including any amount of Compensation
reduction elected by the Officer and contributed or credited
by the Company under any such plan. An Officer who is
receiving credit for years of Service and years of Service
as an Officer under Section 5 on the basis of the receipt of
long-term disability benefits under a Company-sponsored
program of such benefits shall be credited with Compensation
for that period at the same rate of Compensation he or she
had been receiving when last actively at work.
(A) Notwithstanding the foregoing, for Officers who have
completed at least 11 years of Service, Compensation for
periods prior to January 1, 1995 shall also include a
portion of their corporate performance-based annual award
declared under the Annual Incentive Plan provisions of the
Orange and Rockland Utilities, Inc. Incentive Compensation
Plan ("ICP"). For purposes of this Plan and inclusion in
Compensation hereunder, such annual ICP award for each
calendar year prior to January 1, 1995 shall be deemed to be
declared for each Officer and to be equal to a percentage of
that Officer's regular rate of remuneration included in
Compensation for such calendar year under the introductory
paragraph of this definition. The percentage shall be
determined in accordance with Table I of the ICP's
Management Compensation Program Administration Guide, as it
was in effect from time to time, on the basis of the highest
grade or percentage of the Officer for any part of the
applicable calendar year.
Such annual ICP award will be deemed to have been paid
ratably over the calendar year for which it is deemed
declared (i.e., 1/12 for each month), and the portion
includible in Compensation for purposes hereof shall be
determined in accordance with the following schedule, on the
basis of the years of Service the Officer has completed as
of the end of the last month included in the period over
which Final Average Compensation is determined:
Years of Service Percentage of
Annual Award Included
11 10%
12 20%
13 30%
14 40%
15 50%
16 60%
17 70%
18 80%
19 90%
20 or more 100%
(B) Notwithstanding the foregoing, an Officer's
Compensation for periods on and after January 1, 1995 shall
also include the Officer's annual incentive plan target
award under the Orange and Rockland Utilities, Inc. Annual
Team Incentive Plan ("ATIP"), or any successor plan. The
percentage target award for the purposes of this Plan shall
be the highest available percentage for such Officer for the
applicable year, as determined in accordance with the ATIP,
as amended from time to time, on the basis of the Officer's
highest position and/or pay grade for any part of such
calendar year. The award for purposes of this Plan equals
the following percentage (which shall be effective as of
January 1, 1995) multiplied by the Officer's regular rate of
remuneration included in Compensation for such calendar year
under the introductory paragraph of this definition:
Officer's Position Percentage
Chief Executive Officer 45%
Chief Operating Officer 40%
Chief Financial Officer 40%
Chief Legal Officer 40%
Chief Human Resource Officer 30%
Other Officers as specified
Such annual ATIP award will be deemed to have been paid
ratably over the calendar year for which it is deemed
declared (i.e., 1/12 for each month).
(C) In all cases, Compensation shall be determined under
rules uniformly applicable to all Officers similarly
situated.
(10) "Contingent Annuitant" shall mean the person designated by
the Member, in writing filed with the Committee, to receive
any Allowance payable hereunder to a Contingent Annuitant.
Except as hereafter provided, without the necessity of
obtaining the consent of any person, including specifically
the then designated Contingent Annuitant, a designation of a
Contingent Annuitant may be revoked or changed by filing a
new written designation of a Contingent Annuitant with the
Committee prior to the earlier of the Member's death or
commencement of payment of the Member's Allowance.
Notwithstanding the foregoing, in order for a Member who is
married at the time of the designation of Contingent
Annuitant or change in a designation of Contingent Annuitant
to designate a Contingent Annuitant other than his or her
spouse, such designation of Contingent Annuitant must
include the signed, written consent of his or her spouse
(including specific consent to the Contingent Annuitant
designated). In the event of the failure to designate a
Contingent Annuitant as herein provided, the Contingent
Annuitant shall be deemed to be the Member's spouse, if any,
at the earlier of the Member's death or commencement of
payment of the Member's Allowance, if surviving.
(11) "Disability Retirement Allowance" shall mean an Allowance
commuted in accordance with Section 6F.
(12) "Early Retirement Allowance" shall mean an Allowance
computed in accordance with Section 6E.
(13) "Effective Date of the Plan" shall mean originally
December 3, 1981, and with respect to this amended and
restated Plan, July 1, 1997.
(14) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time.
(15) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(16) "Final Average Compensation" shall be computed by taking the
sum of a Member's Compensation on a monthly basis in each of
the three years of highest Compensation during the 10 years
immediately preceding the earliest of (a) his or her
Retirement Date, (b) his or her termination date pursuant to
Section 6(G), or (c) the date the Member ceases to be an
Officer, and dividing this sum by 36. For the purpose of
determining the three years of highest Compensation, three
years shall be 36 consecutive months.
(17) "Member" shall mean any person included in the membership of
the Plan as provided in Section 4.
(18) "Normal Retirement Allowance" shall mean an Allowance
computed in accordance with Section 6(D).
(19) "Normal Retirement Date" shall mean the first day of the
calendar month coincident with or next following the 65th
anniversary of a Member's birth.
(20) "Person" shall have the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and
14(d) thereof, except that such term shall not include
(i) the Company or any of its affiliates (as defined in Rule
12b-2 promulgated under the Exchange Act), (ii) a trustee or
other fiduciary holding securities under an employee benefit
plan of the Company or any of its affiliates, (iii) an
underwriter temporarily holding securities pursuant to an
offering of such securities, or (iv) a corporation owned,
directly or indirectly, by the shareholders of the Company
in substantially the same proportions as their ownership of
stock of the Company.
(21) "Plan" shall mean the Officers' Supplemental Retirement Plan
of Orange and Rockland Utilities, Inc., as set forth herein
and as may be amended from time to time.
(22) "Plan Year" shall mean the calendar year.
(23) "Potential Change in Control" shall mean any one of the
following events:
(A) the Company enters into an agreement, the consummation
of which would result in the occurrence of a Change in
Control;
(B) the Company or any Person publicly announces an
intention to take or to consider taking actions which if
consummated, would constitute a Change in Control;
(C) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 10% or
more of either the then-outstanding securities; or the
combined voting power of the Company's then-outstanding
securities; or
(D) the Board of Directors adopts a resolution to the
effect that, for purposes of any severance agreement to
which the Company is a party, a Potential Change in Control
has occurred.
(24) "Qualified Plan" shall mean the Employees' Retirement Plan
of Orange and Rockland Utilities, Inc. as in effect on
July 1, 1997, but, except as specifically otherwise provided
herein, as amended and as the actuarial equivalencies
thereunder may be revised from time to time.
(25) "Retired Member" shall mean a Member who has retired under
the Plan with an entitlement to a Normal Retirement
Allowance, Early Retirement Allowance, or Disability
Retirement Allowance.
(26) "Service" shall mean service credited under the Plan as
provided in Section 5.
(27) "Vested Member" shall mean a Member whose employment with
the Company or an Affiliated Company has been terminated for
reasons other than retirement or death after he or she met
the eligibility requirements for a Vested Retirement
Allowance pursuant to Section 6(G).
(28) "Vested Retirement Allowance" shall mean an Allowance
computed in accordance with Section 6(G).
Section 3. ELIGIBILITY
Only Officers of Orange and Rockland Utilities, Inc. and/or its
utility subsidiaries, Rockland Electric Company and Pike County
Light & Power Company, may be Members of the Plan.
Section 4. MEMBERSHIP
A person shall become a Member of the Plan on the day he or she
is elected an Officer by the Board, or by the board of the
participating utility subsidiary of which he or she is an
Officer.
Section 5. SERVICE
Except as hereafter provided, a year of Service under the Plan
shall equal one year of Eligible Service under the Qualified Plan
(see Section 4 of the Qualified Plan) as determined on the basis
of the Plan Year measuring period only (i.e., 1,000 hours of
service in a calendar year is a year of Service). Years of
Service as an Officer shall only include those years of Service
credited subsequent to a Member's election as an Officer and
during which he or she serves as an Officer, and shall include
the Plan Year in which the Officer is so elected.
Notwithstanding anything to the contrary in the foregoing,
service following the Member's ceasing to be an Officer shall not
be considered as years of Service for any purpose under the Plan
(except as set forth in Section 15), and in particular shall not
entitle a Member to become eligible for a Vested or other
Retirement Allowance under the Plan even if as a result of such
service the Member becomes eligible for a Vested or other
Retirement Allowance from the Qualified Plan.
To the extent not already credited hereunder as years of Service
and years of Service as an Officer, a Member receiving long-term
disability benefits under a Company-sponsored program of such
benefits shall be entitled to credit for years of Service and
years of Service as an Officer (if such disability occurred while
the Member was an Officer) as though actively at work for so long
as the Member is receiving such disability benefits and is not a
Retired Member hereunder.
The Board, at its sole discretion, may award a Member additional
years of Service for purposes of determining Benefits under
Section 6 and eligibility therefor.
Section 6. BENEFITS
(A) Amount and Payments of Allowance
The Allowance determined under the Plan is equal to:
(i) the Benefit Formula Percentage multiplied by the
Member's Final Average Compensation; less
(ii) the Qualified Plan Allowance payable.
The Allowance shall be paid for the life of the Member,
except as hereafter provided, and shall commence and be paid
in accordance with the provisions of the Plan describing the
Allowance to be paid. If for any month for which the
payment of the Allowance under the Plan is made to a Retired
or Vested Member there is no Qualified Plan Allowance
payable under the Qualified Plan to the Retired or Vested
Member, the Allowance provided for under the Plan shall be
paid without any offset by a Qualified Plan Allowance;
provided, however, that when the Qualified Plan Allowance is
payable to or with respect to such Member, the Allowance
then paid under the Plan shall be adjusted to reflect the
offset for the Qualified Plan Allowance then payable.
(B) Benefit Formula Percentage
The Benefit Formula Percentage shall be the sum of the
percentages awarded for the Member's years of Service
according to the following schedule:
For each of the first ten years of Service:
Four percent;
For each of the second ten years of Service:
Two percent; and
For each year of Service in excess of twenty:
One-half percent.
Example:
A Member with twenty-seven years of Service has a Benefit
Formula Percentage of 63.5%, computed as follows:
First ten years of Service (10 x 4%) = 40%
Second ten years of Service (10 x 2%) = 20%
Remaining seven years of Service (7 x .5%) = 3.5%
Total = 63.5%
(C) Qualified Plan Allowance
For purposes of computing a Plan Allowance only, the
Member's Qualified Plan Allowance shall be computed as if he
or she had elected Option 3 under Qualified Plan Section 6
(Joint and 50% Survivor Annuity) and had named his or her
Contingent Annuitant as contingent annuitant thereunder.
(D) Normal Retirement Allowance
A Normal Retirement Allowance shall be paid to a Member who
has completed five years of Service as an Officer (or was an
Officer at the time of a Change in Control or Potential
Change in Control, as set forth in Section 15), and who
retires on or after his or her Normal Retirement Date. The
Normal Retirement Allowance shall be computed in accordance
with Section 6(A) above and will commence as of the first
day of the calendar month coincident with or next following
the Member's retirement.
(E) Early Retirement Allowance
An Early Retirement Allowance shall be paid to a Member who
has completed five years of Service as an Officer (or was an
Officer at the time of a Change in Control or Potential
Change in Control, as set forth in Section 15), and retires
from employment on or after attaining age 55. Such Early
Retirement Allowance shall be computed in accordance with
Section 6(A) on the basis of the Member's Final Average
Compensation and years of Service at his or her retirement.
Payment of the Early Retirement Allowance under the Plan
will commence as of the first day of the calendar month
coincident with or following the Member's retirement as is
elected by the Member in writing and filed with the
Committee prior to the first day of such calendar month. In
the event payment of the Early Retirement Allowance
commences prior to the first day of the calendar month
coincident with or next following the 60th anniversary of
the Member's birth, in calculating the Early Retirement
Allowance the Section 6(A)(i) amount will be reduced by 1/3
of 1% for each complete month by which the commencement date
precedes the first day of such calendar month; provided,
however, that the foregoing reduction will not be made if,
as of the date the Member's employment terminates because of
retirement, the sum of the Member's age and years of Service
is equal to or greater than eighty-five (85).
(F) Disability Retirement Allowance
(a) Upon written application to the Committee made by the
Member or by the Company, a Member disabled in active
service as an Officer who has not reached his or her
Normal Retirement Date shall be retired on a Disability
Retirement Allowance, in lieu of retirement under any
other provision of the Plan, on the first day of the
calendar month (not less than 30 nor more than 90 days
next following the receipt by the Committee of such
written application) as designated by the Committee;
provided that (i) one or more physicians designated by
the Committee shall certify their opinion, and the
Committee shall find, that such Member is totally
incapacitated, mentally or physically, from the further
performance of his or her regular duties or duties
comparable thereto, and that such incapacity is likely
to be permanent; or (ii) such Member is eligible for
and in receipt of a disability benefit under the Social
Security Act, as amended from time to time, with
respect to a physical or mental incapacity.
(b) The Disability Retirement Allowance shall be computed
in accordance with Section 6(A) on the basis of the
Member's Final Average Compensation and years of
Service at retirement. Payment of the Disability
Retirement Allowance shall commence upon the Member's
retirement and shall continue only so long as the
Member remains totally incapacitated as determined by
the Committee.
Once each year the Committee may require any Member
receiving a Disability Retirement Allowance who has not
reached his or her Normal Retirement Date to undergo a
medical examination by a physician or physicians
designated by the Committee. Such examination, to the
extent possible, will be made at the residence of the
Member or other place mutually agreed upon or otherwise
required under the circumstances. Should any Member
refuse to submit to such an examination, payment of his
or her Disability Retirement Allowance shall be
discontinued until his or her withdrawal of such
refusal. Should such refusal continue for a year, all
rights in and to the Disability Retirement Allowance
shall cease. If the Committee finds on the basis of a
medical examination or otherwise that a Member who is
receiving a Disability Retirement Allowance and who has
not reached his or her Normal Retirement Date is no
longer totally incapacitated and that the Member has
regained his or her earning capacity, in whole or in
part, or that the Member is no longer in receipt of a
disability benefit under the Social Security Act, the
Member's Disability Retirement Allowance will be
discontinued or reduced proportionately; provided that
he or she shall be entitled to have the Disability
Retirement Allowance restored in whole or in part prior
to his or her Normal Retirement Date if, on the basis
of the certification of one or more physicians
designated by the Committee, the Committee finds the
Member is again totally incapacitated, or if the Member
again becomes eligible for and is in receipt of a
disability benefit under the Social Security Act with
respect to the physical or mental incapacity which
originally entitled the Member to the Disability
Retirement Allowance. In the event the Member ceases
to be totally and permanently incapacitated and he or
she does not return to Service, his or her eligibility
for any other Allowance under the Plan shall be
determined under the relevant terms of the Plan.
(G) Vested Retirement Allowance
(a) A Member who has completed five years of Service as an
Officer (or was an Officer at the time of a Change in
Control or Potential Change in Control, as set forth in
Section 15), and who, for reasons other than
retirement, approved leave of absence, or death, ceases
to be employed by the Company or an Affiliated Company,
shall be eligible for a Vested Retirement Allowance on
application therefor.
(b) The Vested Retirement Allowance shall be a deferred
Allowance commencing on the Vested Member's Normal
Retirement Date and shall be computed and payable in
accordance with Section 6(A) on the basis of his or her
Final Average Compensation and years of Service at his
or her date of termination. The Vested Member may
elect to have payment of his or her Vested Retirement
Allowance commence as of the first day of any calendar
month coincident with or following his or her attaining
age 55 as is specified in his or her written election
filed with the Committee prior to the first day of such
calendar month. In the event payment of the Vested
Retirement Allowance commences prior to the first day
of the calendar month coincident with or next following
the 60th anniversary of the Member's birth, the Vested
Retirement Allowance shall be:
(i) the Allowance computed in accordance with
Section 6(A)(i) on the basis of his or her Final
Average Compensation and years of Service at his or her
date of termination; reduced by
(ii) 1/3 of 1% for each complete month by which the
commencement of payment of the Vested Retirement
Allowance precedes the date 5 years prior to his or her
Normal Retirement Date; less
(iii) the Qualified Plan Allowance payable commencing
at the same time.
(H) Death of Retired Member or of Vested Member Receiving
Payment of Allowance
(a) In the event of the death of a Retired Member, an
Allowance will be paid during the life of, and to, the
Retired Member's Contingent Annuitant. The Allowance
paid to the Contingent Annuitant will be equal to
(i) the Retired Member's Allowance as calculated in
accordance with Section 6(A)(i) at the time of the
Retired Member's retirement, subject to the age
differential reduction specified below, and subject to
any reduction for early commencement of payment as was
applied when payment of the Retired Member's Allowance
had commenced, or if the Retired Member's Allowance had
not commenced, as would have been applied to the
Retired Member's Allowance if payment to the Retired
Member had commenced when payment of the Allowance
hereunder commences; reduced by (ii) the Qualified Plan
Allowance then payable to the Contingent Annuitant
(under the Qualified Plan Allowance form of payment
specified in Section 6(C)). In the event the Retired
Member is more than fifteen (15) years older than his
or her Contingent Annuitant, the Allowance to be paid
hereunder, as calculated prior to reduction by the
Qualified Plan Allowance, shall be reduced by three
percent (3%) for each full year in excess of fifteen
years by which the Retired Member's age exceeds the age
of the Contingent Annuitant; provided, however, that
the reduction percentage shall not exceed eighty-five
percent (85%).
If payment of the Retired Member's Allowance had
commenced prior to the Retired Member's death, payment
to the Contingent Annuitant as provided herein shall
commence with the payment for the month following the
month in which the Retired Member's death occurs. If
payment of the Retired Member's Allowance had not
commenced prior to the Retired Member's death, payment
to the Contingent Annuitant as provided herein shall
commence with the payment for the month following prior
election of commencement by the Contingent Annuitant.
In the event that the Contingent Annuitant dies after
the Retired Member and monthly payments of the
Allowance to the Retired Member and Contingent
Annuitant have not been made for a total period of at
least 120 months at the time of the death of the
Contingent Annuitant, the monthly payments being made
to the Contingent Annuitant will continue to be made to
the Beneficiary for the balance of the 120 monthly
payment period. In the event the Retired Member has no
Contingent Annuitant at the time of his or her death,
and dies prior to having received 120 monthly payments
of Allowance, monthly payments that would have been
made hereunder to the Contingent Annuitant will be made
to the Beneficiary for the balance of the 120 monthly
payment period. In addition, in either case, if the
Contingent Annuitant hereunder is also the Retired
Member's contingent annuitant under the Qualified Plan,
the benefit assumed to be paid to the contingent
annuitant under the Qualified Plan Allowance form of
payment specified in Section 6(C) shall be paid
hereunder to the Beneficiary for the balance of the 120
monthly payment period.
(b) In the event of the death of a Vested Member receiving
payment of a Vested Retirement Allowance, an Allowance
will be paid during the life of, and to, the Vested
Member's Contingent Annuitant. The Allowance paid to
the Contingent Annuitant will be equal to (i) the
Vested Member's Vested Retirement Allowance computed in
accordance with Section 6(G)(b)(i) at the time of the
Vested Member's termination of employment, subject to
the age differential reduction specified in Section
6H(a) above and subject to any reduction for early
commencement under Section 6(G)(b)(ii) as was applied
to the Vested Member's Vested Retirement Allowance when
payment of that Vested Retirement Allowance commenced;
reduced by (ii) the Qualified Plan Allowance then
payable to the Contingent Annuitant (under the
Qualified Plan Allowance form of payment specified in
Section 6(C)).
Payments to the Contingent Annuitant as provided herein
shall commence with the payment for the month following
the month in which the Vested Member's death occurs.
(c) In any event where payments are to be made to the
Contingent Annuitant or Beneficiary, the Company, in
its sole discretion, may fully satisfy such payments by
making a lump sum cash payment of the present value of
the remaining payments to be made. In determining such
present value, the actuarial assumptions used to
calculate the Company's contributions under the
Qualified Plan shall be used.
(I) Death of Member in Active Service or of Vested Member Prior
to Commencement of Vested Retirement Allowance
(a) In the event of the death of a Member in active service
prior to or after his or her Normal Retirement Date and
after he or she has completed five years of Service as
an Officer (or was an Officer at the time of a Change
in Control or Potential Change in Control, as set forth
in Section 15), an Allowance shall be payable during
the life of, and to, his or her Contingent Annuitant.
The Allowance payable to the Contingent Annuitant in
accordance with this Section 6(I)(a) shall commence
with the payment for the month following the month in
which the Member's death occurs and shall be equal to
(i) the Member's Allowance as calculated in accordance
with Section 6(A)(i) as if the date of the Member's
death had been the 65th anniversary of the Member's
birth, but on the basis of the Member's Final Average
Compensation and years of Service at death, and subject
to the age differential reduction specified in Section
6(H)(a); reduced by (ii) the Qualified Plan Allowance
that would then be payable to the Contingent Annuitant
if the Contingent Annuitant were the Member's spouse.
(b) In the event of the death of a Vested Member prior to
the commencement of the Vested Retirement Allowance, an
Allowance shall be payable during the life of, and to,
his or her Contingent Annuitant.
Payment of the Allowance in accordance with this
Section 6(I)(b) shall commence as of the first day of
the calendar month as is elected by the Vested Member's
Contingent Annuitant in writing filed with the
Committee prior to the first day of such calendar
month, which shall be no sooner than the first day of
the calendar month coincident with or next following
the later of the Vested Member's death or the 55th
anniversary of the Vested Member's birth and no later
than the first day of the calendar month coincident
with or next following the 65th anniversary of the
Vested Member's birth. The Allowance payable hereunder
shall be equal to the Vested Member's Vested Retirement
Allowance computed in accordance with Section
6(G)(b)(i) at the time of the Vested Member's
termination of employment, subject to the age
differential reduction specified in Section 6(H)(a) and
subject to any reduction for early commencement under
Section 6(G)(b)(ii) as would have been applied to the
Vested Member's Vested Retirement Allowance if payment
of the Vested Retirement Allowance had commenced to the
Vested Member when payment of the Allowance hereunder
commences, reduced by the Qualified Plan Allowance that
would then be payable to the Contingent Annuitant if
the Contingent Annuitant were the Vested Member's
spouse and had coverage by the Vested Member Spouse's
Allowance under the Qualified Plan.
(c) In any event where payments are to be made to the
Contingent Annuitant, the Company, in its sole
discretion, may fully satisfy such payments by making a
lump sum cash payment of the present value of the
remaining payments to be made. In determining such
present value, the actuarial assumptions used to
calculate the Company's contributions under the
Qualified Plan shall be used.
(J) Adjustments to Allowance as A Result of Increases in Cost of
Living
(a) Beginning as of July 1 of the year for which the
cumulative percentage change in the CPI-U (as defined
in (b) below) exceeds 20%, but not earlier than July 1,
1993, and as of each July 1 thereafter, the Allowance
then being paid to or with respect to a Member (other
than a Vested Member whose employment terminated prior
to January 1, 1993) shall be increased by an adjustment
amount, not less than zero, determined by multiplying:
(i) (1) in the case of an Allowance being paid
to the Member, the amount of the Allowance
originally paid to the Member which is then
being paid, or
(2) in the case of an Allowance being paid
with respect to a Member:
(A) and if an Allowance had
previously been paid to that Member, the
amount of the Allowance originally paid
to the Member which is then being paid
to the Contingent Annuitant or
Beneficiary; or
(B) and an Allowance had not
previously been paid to that Member, the
amount of the Allowance originally paid
to the Contingent Annuitant or
Beneficiary which is then being paid;
by (ii) a percentage (rounded to the nearest 1/100 of
1%) equal to 75% of the cumulative percentage
change in the CPI-U for the year in excess of 20%,
but not more than the applicable cumulative
maximum percentage, as each is defined in (b)
below).
(b) The terms specified below which are used in (a) above
shall have the meanings set forth below, unless the
context clearly dictates another meaning.
(i) "CPI-U" means the annual average figure under
the Consumer Price Index for All Urban Consumers,
U.S. City Average of All Items (1982-1984 = 100),
or its successor, as published by the United
States Bureau of Labor Statistics.
(ii) "cumulative percentage change in the CPI-U"
for a year is calculated by dividing the
difference between the CPI-U for the prior year
and the CPI-U for the year prior to the year in
which the Allowance originally commenced by the
CPI-U for the year prior to the year in which the
Allowance originally commenced, and rounding to
the nearest 1/100 of 1% (e.g., for purposes of
determining the cumulative percentage change in
the CPI-U for 1993 for a Member whose Allowance
commenced in 1990, subtract the CPI-U for 1989
from the CPI-U for 1992, then divide the result by
the CPI-U for 1989 and round to the nearest 1/100
of 1%). Notwithstanding any provisions herein to
the contrary, in all cases when the Allowance
commenced before January 1, 1989, the cumulative
percentage change in the CPI-U for a year shall be
calculated by dividing the difference between the
CPI-U for the prior year and the CPI-U for 1991 by
the CPI-U for 1991, rounding to the nearest 1/100
of 1%, and adding 20%.
(iii) "cumulative maximum percentage" is 3%
for the first year in which an adjustment is first
made hereunder and for each succeeding year is 3%
plus 103% of the prior year's cumulative maximum
percentage, rounded to the nearest 1/100 of 1%
(e.g., 3% for the first year adjustment, 6.09% for
the second year, 9.27% for the third year, and so
on).
(c) The provisions of this Section 6(J) are intended to
operate and apply in the same manner and fashion as
the Pension Benefit Adjustments under the Qualified
Plan.
Section 7. ADMINISTRATION OF THE PLAN; POWER AND AUTHORITY
The Committee shall have full power and authority to construe,
interpret and administer the Plan. All decisions, actions or
interpretations of the Committee shall be final, conclusive, and
binding upon all parties. If any person objects to any such
decision, action or interpretation, formally or informally, the
expenses of the Committee and its agents and counsel shall be
chargeable against any amounts otherwise payable under the Plan
to or on account of the Member.
Section 8. NO LIABILITY OF COMMITTEE MEMBERS
No member of the Committee shall be personally liable by reason
of any contract or other instrument executed by him or her or on
his or her behalf in his or her capacity as a member of the
Committee nor for any mistake of judgment made in good faith, and
the Company shall indemnify and hold harmless each member of the
Committee and each other Officer, employee, or Director of the
Company to whom any duty or power relating to the administration
or interpretation of the Plan may be allocated or delegated
against any cost or expense (including counsel fees) or liability
(including any sum paid with the approval of the Board in
settlement of a claim) arising out of any act or omission to act
in connection with the Plan, unless arising out of such person's
own fraud or bad faith.
Section 9. RIGHT TO AMEND, SUSPEND, OR TERMINATE PLAN
The Board reserves the right at any time to amend, suspend, or
terminate the Plan, in whole or in part and for any reason, and
without the consent of any Member, Contingent Annuitant or
Beneficiary; provided that no such amendment, suspension or
termination shall adversely affect rights to receive any amount
to which Members, Contingent Annuitants or Beneficiaries have
become entitled prior to such amendment, suspension or
termination; and further provided, that upon any such amendment,
suspension or termination after a Change in Control or Potential
Change in Control, any Member who has not completed five years of
Service shall become fully vested in the Vested Retirement
Benefit as though such Member had completed five years of Service
pursuant to Section 15.
Section 10. NO ALIENATION OF BENEFITS
Except insofar as may otherwise be required by law, no amount
payable at any time under the Plan shall be subject in any manner
to alienation by anticipation, sale, transfer, assignment,
bankruptcy, pledge, attachment, charge, or encumbrance of any
kind nor in any manner be subject to the debts or liabilities of
any person, and any attempt to so alienate or subject any such
amount, whether presently or thereafter payable, shall be void.
If any person shall attempt to, or shall, alienate, sell,
transfer, assign, pledge, attach, charge, or otherwise encumber
any amount payable under the Plan, or any part thereof, or if by
reason of his or her bankruptcy or other event happening at any
such time such amount would be made subject to his or her debts
or liabilities or would otherwise not be enjoyed by him or her,
then the Committee, if it so elects, may direct that such amount
be withheld and that the same or any part thereof be paid or
applied to or for the benefit of such person, his or her spouse,
children or other dependents, or any of them, in such manner and
proportion as the Committee may deem proper. Any such payment or
application shall be in complete satisfaction of the payment
which otherwise would have been made to or with respect to the
Member. Nothing in the foregoing procedure shall preclude the
Committee's having the payment entitlement judicially settled.
Section 11. PERIODIC REVIEW OF PLAN
In order to assure the continued realization of the purposes of
the Plan, the Board and the Committee shall review the Plan, and
the Committee may suggest amendments to the Board, periodically.
Section 12. GENERAL LIMITATIONS AND PROVISIONS
Nothing contained in the Plan shall give any Officer the right to
be retained in the employment of the Company or affect the right
of the Company to dismiss any Officer. The adoption of the Plan
shall not constitute a contract of employment between the Company
and any Officer. No Officer shall receive any right to be
granted an Allowance hereunder nor shall any such Allowance be
considered as compensation under any employee benefit plan of the
Company, except as otherwise determined by the Company.
Section 13. SOURCE OF PAYMENTS
All payments of Allowances provided for under the Plan shall be
paid in cash from the general funds of the Company; provided,
however, that such payments shall be reduced by the amount of any
payments made to the Member or his or her spouse, dependents,
Contingent Annuitant, Beneficiaries or estate from any trust or
special or separate fund established by the Company to assure
such payments. The Company shall not be required to establish a
special or separate fund or other segregation of assets to assure
such payments, and, if the Company shall make any investments to
aid it in meeting its obligations hereunder, the Member shall
have no right, title, or interest whatever in or to any such
investments except as may otherwise be expressly provided in a
separate written instrument relating to such investments.
Nothing contained in this Plan, and no action taken pursuant to
its provisions, shall create or be construed to create a trust of
any kind between the Company and any Members. To the extent that
any Member acquires a right to receive payments from the Company
hereunder, such right shall be no greater than the right of an
unsecured creditor of the Company.
Section 14. UNFUNDED PLAN; GOVERNING LAW
The Plan is intended to constitute an unfunded deferred
compensation arrangement for a select group of management or
highly compensated personnel and all rights hereunder shall be
governed by and construed in accordance with the laws of the
State of New York.
Section 15. CHANGE IN CONTROL
Notwithstanding anything else herein to the contrary, if after a
Change in Control or Potential Change in Control (i) the
employment of a Member is terminated (whether by the Company or
for Good Reason), or (ii) a Member ceases to be an Officer, then
any such Member who has no Vested Retirement Allowance shall be
entitled to a Vested Retirement Allowance as though such Member
had completed five years of Service as an Officer for purposes of
Section 6(G).
"Good Reason" shall mean a determination by the Member in good
faith that there has been any (i) material change by the Company
of the Member's functions, duties or responsibilities which
change would cause the Member's position with the Company to
become of less dignity, responsibility, importance, prestige or
scope including, without limitation, the assignment to the Member
of duties and responsibilities inconsistent with his or her
positions; (ii) assignment or reassignment by the Company of the
Member without the Member's consent, to another place of
employment more than 50 miles from the Member's current place of
employment; (iii) liquidation, dissolution, consolidation or
merger of the Company which has not been approved by a majority
of those members of the Board who were members of the Board prior
to the Change in Control or Potential Change in Control, or
transfer of all or substantially all of its assets, other than a
transaction or series of transactions in which the resulting or
surviving transferee entity has, in the aggregate, a net worth at
least equal to that of the Company and assumes this Plan and all
obligations and undertakings of the Company hereunder; or
(iv) reduction in the Member's total compensation or any
component thereof, by written notice to the Company, specifying
the event relied upon for such termination and given at any time
within six (6) months after the occurrence of such event.
In the event of a Change in Control or Potential Change in
Control, the Company shall as soon as possible (but in no event
later than 30 days after such Change in Control or Potential
Change in Control) make a payment to an irrevocable trust of an
amount that, when added to any other amounts in such trust with
respect to this Plan, shall result in an amount which is equal to
at least 100% (but no more than 120%) of the present value of the
benefits payable hereunder as of the date of the Change in
Control or the Potential Change in Control (determined using the
actuarial factors set forth in the Qualified Plan), as certified
by an enrolled actuary appointed by the Committee.
Notwithstanding the foregoing, the assets of such trust shall
remain subject to the claims of the Company's general creditors.
Section 16. PAYMENT OF ALLOWANCE
If in the judgment of the Committee, any person entitled to the
payment of an Allowance hereunder is incapable of receiving and
legally receipting for such payment, payment of the Allowance may
be made to such other person, persons or institutions as, in the
judgment of the Committee, may then by maintaining or have
custody or legal responsibility for such person or his or her
property. The determination of the Committee as to the identity
of the proper payee in such situation shall be conclusive, and
payment in accordance with such determination shall be in
complete satisfaction of all rights and entitlements with respect
to the Allowance so paid.
Section 17. SUCCESSORS
Any successor (whether direct or indirect by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business or assets of the Company shall be bound by the terms and
conditions of the Plan.
ORANGE AND ROCKLAND UTILITIES, INC.
POST-DIRECTOR SERVICE
RETAINER CONTINUATION PROGRAM
Effective: April 8, 1987
Amended effective as of: April 12, 1989
June 1, 1989
April 5, 1990
April 14, 1993
March 2, 1995
July 1, 1997
**************
ORANGE AND ROCKLAND UTILITIES, INC.
POST-DIRECTOR SERVICE
RETAINER CONTINUATION PROGRAM
In recognition of the added value of the continued
service of directors who are experienced with the operations of
Orange and Rockland Utilities, Inc. (the "Company") because of
their length of service on the Board and to provide a benefit for
such experience so as to encourage directors to continue to
serve, the following Company Post-Director Service Retainer
Continuation Program (the "Program") is hereby created:
1. Eligibility. Any director who is not otherwise covered by
any qualified retirement plan or program sponsored by the Company
and who has served as a member of the Company's Board of
Directors for a period of at least five (5) continuous years
shall be an "Eligible Director".
2. Retainer Continuation. Upon ceasing to he a member of the
Board of Directors, an Eligible Director shall be entitled to the
continuation of one hundred percent (100%) of the annual Board
and Committee service retainers as in effect and being paid to
such Eligible Director at the time the Eligible Director ceased
to be a member of the Board of Directors, subject to the
limitations contained in Paragraph 3 below.
3. Time and Manner of Payment. The retainer continuation
payments shall commence (i) if the Eligible Director is living,
as of the first day of the calendar month next following the
later of the Eligible Director's attaining age 65 or ceasing to
be a member of the Board of Directors, or (ii) in the case of the
death of an Eligible Director prior to commencement of payments,
as of the first day of the calendar month next following the
later of the 65th anniversary of the Eligible Director's birth or
the Eligible Director's date of death; provided, however, that if
the Eligible Director has already received an installment of the
annual retainer for a period extending beyond when the retainer
continuation payments would otherwise begin as provided herein,
the retainer continuation payments will not commence until the
expiration of the period for which the retainer has been paid.
The retainer continuation payments shall be made in nearly equal
monthly installments equal to one-twelfth (1/12th) the annual
retainer specified in Paragraph 2 above. Such payments shall be
made as of the first day of each month and shall continue for a
period equal to the Eligible Director's full years of service on
the Board of Directors. In the event an Eligible Director dies,
either while serving on the Board or after retiring from the
Board, and where payments remain to be made, the remaining
payments shall be made to the beneficiary last designated by the
Eligible Director in writing to the Retirement Committee, or if
none, to the Eligible Director's estate. In the event of the
death of a beneficiary to whom payments are due, the remaining
payments shall he made to such beneficiary's estate. In the
event payments are to be made to a beneficiary or to the estate
of an Eligible Director or a beneficiary, the Retirement
Committee, at its sole discretion and at any time, may provide
for the lump-sum payment of the present value of the remaining
payments, such present value to be determined by using a discount
factor equal to the interest rate assumption used to calculate
the Company's contribution under the Employees' Retirement Plan
of Orange and Rockland Utilities, Inc.
Beginning as of July 1 of the year for which the
cumulative percentage change in the CPI-U (as defined below)
exceeds 20%, but not earlier than July 1, 1993, and as of each
July 1 thereafter, the retainer continuation payments then being
paid to or with respect to an Eligible Director shall be
increased by an adjustment amount, not less than zero, determined
by multiplying the original retainer continuation payment amount
by a Percentage (rounded to the nearest 1/100 of 1%) equal to 75%
of the cumulative percentage change in the CPI-U for the year in
excess of 20%, but not more than the applicable cumulative
maximum percentage (as each is defined below).
The terms specified below which are used above shall
have the following meanings unless the context clearly dictates
another meaning:
(x) "CPI-U" means the annual average figure under the
Consumer Price Index for All Urban Consumers, U.S.
City Average of All Items (1982-1984 = 100), or
its successor, as published by the United States
Bureau of Labor Statistics.
(y) "cumulative percentage change in the CPI-U" for a
year is calculated by dividing the difference
between the CPI-U for the prior year and the CPI-U
for the year prior to the year in which the
retainer continuation payment originally commenced
by the CPI-U for the year prior to the year in
which the retainer continuation payment originally
commenced, and rounding to the nearest 1/100 of 1%
(e.g., for purposes of determining the cumulative
percentage change in the CPI-U for 1993 for an
Eligible Director whose retainer continuation
payment commenced in 1990, subtract the CPI-U for
1989 from the CPI-U for 1992, then divide the
result by the CPI-U for 1989 and round to the
nearest 1/100 of 1%). Notwithstanding any
provisions herein to the contrary, in all cases
when the retainer continuation payment commenced
before January 1, 1989, the cumulative percentage
change in the CPI-U for a year shall be calculated
by dividing the difference between the CPI-U for
the prior year and the CPI-U for 1991 by the CPI-U
for 1991, rounding to the nearest 1/100 of 1%, and
adding 20%.
(z) "cumulative maximum percentage" is 3% for the
first year in which an adjustment is first made
hereunder and for each succeeding year is 3% plus
103% of the prior year's cumulative maximum
percentage, rounded to the nearest 1/100 of 1%
(e.g., 3% for the first year adjustment, 6.09% for
the second year, 9.27% for the third year, and so
on).
4. Nature of Payment. The retainer continuation payments are
purely personal to the Eligible Director and may not be assigned,
alienated, anticipated or encumbered. Any attempt to assign,
alienate, anticipate or encumber the payments shall result in the
Eligible Director's forfeiture of all rights to any retainer
continuation payments hereunder.
5. Source of Payments. All payments of awards provided for
under the Program shall be paid in cash from the general funds of
the Company; provided, however, that such payments shall be
reduced by the amount of any payments made to the director or his
or her dependents, beneficiaries or estate from any trust or
special or separate fund established by the Company to assure
such payments. The Company shall not be required to establish a
special or separate fund or other segregation of assets to assure
such payments, and, if the Company shall make any investments to
aid it in meeting its obligations hereunder, the director shall
have no right, title, or interest whatever in or to any such
investments except as may otherwise he expressly provided in a
separate written instrument relating to such investments.
Nothing contained in this Program, and no action taken pursuant
to its provisions, shall create or be construed to create a trust
of any kind between the Company and any persons. To the extent
that any person acquires a right to receive payments from the
Company hereunder, such right shall be no greater than the right
of an unsecured creditor of the Company.
6. Administration. This Program shall be administered by the
Retirement Committee of the Company, which shall have the full
power and authority to construe, interpret and administer the
Program. All decisions, actions or interpretations of the
Retirement Committee shall be final, conclusive and binding on
all parties.
7. Amendment. The Board of Directors reserves the right to
amend the Program in whole or in part at any time without the
specific consent of any Eligible Director; provided, however,
that no such amendment shall adversely affect retainer
continuation payments then being made or the rights of any then
Eligible Director to receive retainer continuation payments
earned prior to the amendment, calculated on the basis of such
Eligible Director's continuous service as a director at the time
of the amendment and the annual retainer then in effect.
8. Termination. The Board of Directors reserves the right to
terminate the Program at any time. Termination of the Program
shall not affect the retainer continuation payments then being
made. Such payments shall be continued in accordance with the
terms hereof. In addition, termination of the Program shall not
affect the right of any Eligible Director as of the date of
termination to receive retainer continuation payments which shall
be calculated on the basis of the continuous service of the
Eligible Director as of the time of termination of the Program
and the annual retainer then in effect. Such retainer
continuation payments shall commence and be paid in accordance
with the otherwise applicable provisions of the Program
(Paragraph 3).
9. Change in Control.
(a) Notwithstanding anything else herein to the
contrary, in the event of the occurrence of a Change in Control
or Potential Change in Control, if any, each Eligible Director
shall have the right to receive and shall be paid, as soon as
practicable after such occurrence, a lump sum cash amount equal
to the present value of the retainer continuation payments that
would otherwise have been paid pursuant to Paragraph 3, on the
assumption that: (i) payments (including any payments already
made) would be made for a period equal to the lesser of the
Eligible Director's full years of service on the Board of
Directors or ten (10) years, and (ii) that, with respect to
Eligible Directors who were not yet receiving retainer
continuation payments, such payments would commence on the later
of (A) the Eligible Director's attaining age 65 or (B) the date
of the Change in Control or Potential Change in Control,
whichever is applicable. Such present value shall be determined
by using a discount factor equal to the interest rate assumption
used to calculate the Company's contributions under the
Employees' Retirement Plan of Orange and Rockland Utilities, Inc.
as of the date of the Change in Control or Potential Change in
Control, whichever is applicable, and such present value shall be
certified by an enrolled actuary appointed by the Retirement
Committee.
(b) A "Change in Control" shall be deemed to have
occurred if the event set forth in any one of the following
paragraphs shall have occurred:
(i) any Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its affiliates
other than in connection with the acquisition by the Company or
its affiliates of a business) representing 20% or more of either
the then-outstanding Company Common Stock, $5 par value per share
(or any successor common stock) ("Shares") or the combined voting
power of the Company's then-outstanding securities;
(ii) the following individuals cease for any
reason to constitute a majority of the number of Directors then
serving: individuals who, on April 1, 1997, constituted the
Board of Directors of the Company and any new Director (other
than a Director whose initial assumption of office is in
connection with an actual or threatened election contest,
including, but not limited to, a consent solicitation, relating
to the election of Directors of the Company (as such terms are
used in Rule 14a-11 of Regulation 14A under the Exchange Act))
whose appointment or election by the Board or nomination for
election by the Company's shareholders was approved by a vote of
at least two-thirds (2/3) of the Directors then still in office
who either were Directors on April 1, 1997 or whose appointment,
election or nomination for election was previously so approved;
(iii) the shareholders of the Company approve a
merger or consolidation of the Company with any other corporation
or approve the issuance of voting securities of the Company in
connection with a merger or consolidation of the Company (or any
direct or indirect subsidiary of the Company) pursuant to
applicable stock exchange requirements, other than (A) a merger
or consolidation which would result in the voting securities of
the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any parent thereof), in combination with the
ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, at least 65% of
the combined voting power of the voting securities of the Company
or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (B) a merger
or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or becomes
the Beneficial Owner, directly or indirectly, of securities of
the Company (not including in the securities beneficially owned
by such Person any securities acquired directly from the Company
or its affiliates other than in connection with the acquisition
by the Company or its affiliates of a business) representing 20%
or more of either the then-outstanding Shares or the combined
voting power of the Company's then-outstanding securities;
(iv) the shareholders of the Company approve a
plan of complete liquidation or dissolution of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity, at least 65% of the combined
voting power of the voting securities of which are owned by
Persons in substantially the same proportions as their ownership
of the Company immediately prior to such sale.
Notwithstanding the foregoing, no "Change in Control"
shall be deemed to have occurred if there is consummated any
transaction or series of integrated transactions immediately
following which the record holders of Shares immediately prior to
such transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity which
owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.
(c) "Potential Change in Control" shall be deemed to
have occurred if the event set forth in any one of the following
paragraphs shall have occurred:
(i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change
in Control;
(ii) the Company or any Person publicly announces
an intention to take or to consider taking actions which if
consummated, would constitute a Change in Control;
(iii) any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing
10% or more of either the then-outstanding securities; or the
combined voting power of the Company's then-outstanding
securities; or
(iv) the Board of Directors adopts a resolution
to the effect that, for purposes of any severance agreement to
which the Company is a party, a Potential Change in Control has
occurred.
(d) "Beneficial Owner" shall have the meaning set
forth in Rule 13d-3 under the Exchange Act.
(d) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
(f) "Person" shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof, except that such term shall not
include (i) the Company or any of its affiliates (as defined in
Rule 12b-2 promulgated under the Exchange Act), (ii) a trustee or
other fiduciary holding securities under an employee benefit plan
of the Company or any of its affiliates, (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly,
by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
10. Miscellaneous.
(a) The Program shall be governed by and construed in
accordance with the laws of the State of New York, as from time
to time in effect.
(b) The Company shall deduct from the distributions to
be made to an Eligible Director any Federal, state, or local
withholding or other taxes or charge which the Company is from
time to time required to deduct under applicable law.
(c) All disputes and controversies arising out of or
relating to the Program shall be settled exclusively by
arbitration in New York, New York in accordance with the rules of
the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator's award in any State or Federal
Court sitting in the State of New York having jurisdiction
thereof. Notwithstanding any provision of the Program to the
contrary, Eligible Directors and beneficiaries shall be entitled
to seek in any State or Federal Court sitting in the State of New
York having jurisdiction thereof specific performance of their
respective rights to receive distributions provided for in the
Program during the pendency of any such dispute or controversy
arising out of or relating to the Program.
11. Effective Date. This Program was originally effective as of
April 8, 1987. This amendment and restatement of the Program is
effective as of July 1, 1997.
ORANGE AND ROCKLAND UTILITIES, INC.
LONG-TERM PERFORMANCE SHARE UNIT PLAN
Effective January 1, 1995,
as amended through July 1, 1997
ORANGE AND ROCKLAND UTILITIES, INC.
LONG-TERM PERFORMANCE SHARE UNIT PLAN
1. Purpose.
The purpose of this Long-Term Performance Share Unit Plan
(the "Plan") of Orange and Rockland Utilities, Inc. (the
"Company") is to provide an additional means to attract, retain,
and provide incentives to executive officers and other key
employees of the Company and its Affiliates through a
compensation program intended (i) to be competitive with the
practices of other utility companies; (ii) to provide a strong
and direct link between Participants' pay and Company performance
on behalf of its shareholders and customers; (iii) to compensate
Participants for their successful long-term strategic management
of the Company; (iv) to permit actual compensation to be based on
the achievement of the Company's long-term strategic objectives
and performance; and (v) to more closely align the financial
interests of Participants and Company shareholders.
2. Definitions.
In addition to the terms defined in Section 1, the following
are defined terms for purposes of the Plan:
(a) "Affiliate" means an entity that directly, or
indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the Company.
(b) "Award" means, with respect to a person selected to
become a Participant in respect of a Performance Period, the
grant of a number of Target PSUs, the grant of the right to earn
Dividend Equivalent PSUs, the grant of the right to earn a number
of Bonus PSUs (expressed as a percentage of the number of Target
PSUs granted in the Award), the Performance Goal(s) for such
Performance Period, and the number, or formula for determining
the number, of Target PSUs, Dividend Equivalent PSUs, and Bonus
PSUs earned for specified levels of achievement of the
Performance Goal(s) for such Performance Period, all in
accordance with Section 5(a).
(c) "Award Account" means a bookkeeping account maintained
by the Company for each Award granted to a Participant. Each
Award Account shall from time to time reflect the number of
Target PSUs granted and the number of Dividend Equivalent PSUs
and Bonus PSUs that the Participant has a right to earn for the
Performance Period, as well as other transactions relating to
PSUs. At such time as the Committee determines the number of
Target PSUs, Dividend Equivalent PSUs, and Bonus PSUs earned by
the Participant with respect to the Award, such PSUs earned shall
be settled in cash or Shares (subject to Section 11(a)), or
deferred in accordance with Section 6. If any voluntary deferral
is credited to the Award Account in a form other than a DSU, such
deferral shall be credited to such bookkeeping accounts,
representing the deemed voluntary investment alternatives that
are available to Participants under the Plan, as may be
determined from time to time by the Committee ("Deferral
Accounts"), which shall reflect the amount of such deferral,
including earnings and interest credited in accordance with
Section 8(b), as well as other transactions relating to the
balances in such Deferral Accounts. If any DSUs are credited to
the Award Account through a mandatory or voluntary deferral ("DSU
Account"), the DSU Account shall reflect the number of DSUs,
including Dividend Equivalent DSUs credited in accordance with
Sections 8(c), as well as other transactions relating to the DSUs
in such DSU Account.
(d) "Beneficiary" means the person or persons, designated
by the Participant under Section 11(d), who, from and after the
death of the Participant, shall have the rights, if any, of the
Participant under the Plan; provided, however, that if no
Beneficiary designation under the terms of the Plan is in effect
at the time of a Participant's death, or if no Beneficiary
survives the Participant, or if such designation violates
applicable law, (i) the Participant's spouse, or, (ii) if none,
the Participant's estate, shall be deemed to be the Beneficiary.
(e) "Board" means the Board of Directors of the Company.
(f) "Bonus PSUs" means PSUs that a Participant has a right
to earn if the Performance Goal Maximum for the Award is
achieved. The number of Bonus PSUs which may be earned in an
Award is expressed, for purposes of the Plan, as a percentage of
the Target PSUs granted in such Award. Performance that fails to
exceed the Performance Goal Target for the Award will result in
no Bonus PSUs being earned, and performance that exceeds the
Performance Goal Target for the Award but does not equal or
exceed the Performance Goal Maximum for the Award will result in
a specified portion of the Bonus PSUs being earned.
(g) "Cause" for Termination by the Company of a
Participant's employment means Termination in the event that
(i) the Participant is convicted of a crime or engages in an act
of moral turpitude; (ii) the Participant breaches any of his or
her obligations under any employment agreement governing his or
her employment; (iii) the Participant is grossly negligent or
engages in gross misconduct in rendering services to the Company
or an Affiliate, and by such action, or failure to act, causes
substantial detriment to the Company or an Affiliate; (iv) the
Participant repeatedly fails to follow written Company policies
or guidelines that have been expressly approved by the Company or
an Affiliate, and by such action, or failure to act, causes
substantial detriment to the Company or an Affiliate; or (v) the
Participant breaches any of his or her fiduciary duties as an
officer or director of the Company or an Affiliate.
(h) "Change in Control" and certain related terms are
defined in Section 9(b).
(i) "Committee" means the Compensation Committee of the
Board; provided, however, that, if any member of the Compensation
Committee fails to qualify as a "Non-Employee Director", as
defined in Rule 16b-3 under the Exchange Act, (A) the member who
fails to qualify shall not be involved in the administration of
the Plan, or (B) the Board may designate another Board committee
to serve as the Committee for purposes of administering the Plan,
as determined by the Board in its discretion. Other provisions
of the Plan notwithstanding, the Board may perform any function
of the Committee under the Plan, including, without limitation,
for the purpose of ensuring that transactions under the Plan by
any Participant who is then subject to Section 16 of the Exchange
Act in respect of the Company are exempt under Rule 16b-3. In
any case in which the Board is performing a function of the
Committee under the Plan, the term "Committee" as used in this
Plan shall include the Board.
(j) "Deferred Share Unit" or "DSU" means a bookkeeping unit
of account under the Plan representing the value of one Share
credited to a Participant's DSU Account, subject to the terms and
conditions of the Plan. DSUs are accounting measures created and
used solely for purposes of the Plan, and do not represent
ownership rights in the Company, Shares, or any asset of the
Company.
(k) "Dividend Equivalent DSUs" means DSUs credited to the
Participant's DSU Account, in respect of credited DSUs, including
DSUs that were originally credited as Dividend Equivalent DSUs,
equivalent in value to dividends or distributions paid on Shares
or Shares issued in forward Share splits, the record date for
which falls during the time that DSUs are credited to the
Participant's DSU Account, all in accordance with Section 8(c).
(l) "Dividend Equivalent PSUs" means PSUs that a
Participant has the right to earn, in respect of Target PSUs and
previously credited Dividend Equivalent PSUs, if the applicable
Performance Goal Target is achieved, equivalent in value to
dividends or distributions paid on Shares or Shares issued in
forward Share splits, the record date for which falls during the
Performance Period, or after the Performance Period but prior to
the Settlement Date, all in accordance with Section 5(e).
(m) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(n) "Fair Market Value" means, in the case of a Share as of
a given date, the average of the high and the low sales prices of
a Share reported in the table entitled "New York Stock Exchange
Composite Transactions" contained in The Wall Street Journal (or
an equivalent successor table) for such date or, if no such
prices were reported for such date, for the most recent trading
day prior to such date for which such prices were reported. In
the case of property other than Shares as of a given date, "Fair
Market Value" shall be determined in good faith by or at the
direction of the Committee.
(o) "Grant Date" means, in the case of Awards granted under
Section 5(a), the first day of the Performance Period, and in the
case of Awards granted during a Performance Period under Section
5(d), the date the Committee authorized the grant of the Award or
such other date as may be specified by the Committee.
(p) "Latest Quarter's Average FMV" means, in the case of a
Share as of a given date, the average of the Fair Market Values
of a Share on each trading day during the calendar quarter that
ended on the March 31, June 30, September 30, or December 31
nearest to but preceding such date.
(q) "Participant" means a person who has been granted an
Award with respect to a Performance Period that has not ended, or
who has cash credited to his or her Deferral Account(s) or DSUs
credited to his or her DSU Account.
(r) "Performance Goal(s)" means, with respect to an Award,
the targeted business criterion or criteria and targeted level or
levels of performance with respect to such criterion or criteria
required to be achieved during a Performance Period in order for
a Participant to earn PSUs for such Performance Period. The
following terms relate to the term "Performance Goal(s)":
(i) "Performance Goal Maximum" means the Performance
Goal(s) that, if achieved, will result in the Participant's
earning all Target PSUs, Dividend Equivalent PSUs, and Bonus
PSUs for the Performance Period, subject to the terms and
conditions of the Plan.
(ii) "Performance Goal Target" means the Performance
Goal(s) that, if achieved, will result in the Participant's
earning all Target PSUs and Dividend Equivalent PSUs for the
Performance Period or, conversely, if not achieved, will
result in the Participant's forfeiting a specified portion
of Target PSUs and not earning a specified portion of
Dividend Equivalent PSUs, and which must be exceeded in
order for the Participant to earn any Bonus PSUs for the
Performance Period, subject to the terms and conditions of
the Plan.
(iii) "Performance Goal Threshold" means the
Performance Goal(s) that must be achieved for the
Participant to earn any Target PSUs and Dividend Equivalent
PSUs for the Performance Period or, conversely, if not
achieved, will result in the Participant's forfeiting all
Target PSUs and not earning any Dividend Equivalent PSUs.
Performance that falls between the Performance Goal
Threshold and the Performance Goal Target will result in the
Participant's earning a specified portion of Target PSUs and
Dividend Equivalent PSUs and forfeiting all other Target
PSUs and Dividend Equivalent PSUs.
(s) "Performance Period" means a specified period, not to
exceed three calendar years, over which achievement of
Performance Goal(s) is to be measured. Subject to Section 5(c),
a Performance Period generally will be a three-year period,
unless otherwise determined by the Committee. A given
Performance Period may overlap with any other Performance Period.
(t) "Performance Share Unit" or "PSU" means a bookkeeping
unit of measure of compensation under the Plan, deemed to be
equal in value to one Share, which may be earned by a Participant
if a Performance Goal Threshold is achieved during a specified
Performance Period, subject to the terms and conditions of the
Plan. PSUs are accounting measures created and used solely for
purposes of the Plan, and do not represent ownership rights in
the Company, Shares, or any asset of the Company.
(u) "Potential Change in Control" and certain related terms
are defined in Section 9(c).
(v) "Pro Rata" means, with respect to the number of Target
PSUs granted and Dividend Equivalent PSUs and Bonus PSUs that the
Participant has the right to earn for a given Performance Period
in which there occurs a specified event (e.g., a Termination), a
fractional portion of the total number of each such type of PSUs,
where the numerator of the fraction is the number of full months
elapsed from the Grant Date to the date of such event, and the
denominator of the fraction is the number of full months from the
Grant Date until the end of the Performance Period.
(w) "Retirement" means any time that a Participant is
entitled to a "Retirement Allowance", other than a Vested
Retirement Allowance, as defined under the Employees' Retirement
Plan of Orange and Rockland Utilities, Inc. or the Officers'
Supplemental Retirement Plan of Orange and Rockland Utilities,
Inc., or an earlier retirement approved for purposes of the Plan
by the Committee.
(x) "Settlement Date" means that date within 90 days after
the end of a given Performance Period that the Committee
determines the proper amount of Target, Dividend Equivalent
and/or Bonus PSU's earned by a Participant in respect of such
Performance Period.
(y) "Shares" means shares of the Company's Common Stock, $5
par value per share, and such other securities as may be
substituted for Shares or for such other securities under the
adjustment provisions of Section 10.
(z) "Target PSUs" means PSUs granted to a Participant as of
the Grant Date that he or she will earn if the applicable
Performance Goal Target is achieved. Performance that fails to
equal or exceed the Performance Goal Threshold for the Award will
result in the Participant's forfeiting all Target PSUs, and
performance that equals or exceeds the Performance Goal Threshold
for the Award but does not equal or exceed the applicable
Performance Goal Target will result in the Participant's
forfeiting a specified portion of the Target PSUs.
(aa) "Termination" (and related terms) means termination of
a Participant's employment with the Company or any of its
Affiliates immediately after which the Participant is no longer
performing services for the Company or any of its Affiliates on a
salary basis, and without regard to whether the former employee
receives any form of severance or termination payments following
his or her Termination or is retained to provide services for
hire as a consultant or independent contractor.
3. Administration.
(a) Authority of the Committee. The Plan shall be
administered by the Committee. The Committee shall have full
authority in its discretion to take or refrain from taking all
actions under the Plan, in each case subject to and consistent
with the terms and conditions of the Plan and any outstanding
Award, including, without limitation, the following:
(i) To take the actions required or permitted under
Sections 5 and 6, and determine all other terms and
conditions of PSUs, DSUs, Deferral Accounts and DSU
Accounts;
(ii) To adopt, amend, suspend, waive, and rescind such
rules and regulations, prescribe such forms of agreements,
notices, elections, and other Plan documents, and appoint
such agents, as it may deem necessary or advisable to
administer the Plan;
(iii) To correct any defect or supply any omission or
reconcile any inconsistency in the Plan or any Award, and to
construe and interpret the Plan, any Award, and any rule or
regulation, agreement, notice, election, or other Plan
document; and
(iv) To make all other decisions and determinations as
may be required under the Plan or as the Committee may deem
necessary or advisable for the administration of the Plan.
(b) Manner of Exercise of Committee Authority. Any action
of the Committee under the Plan shall be final, conclusive, and
binding on all persons, including the Company, Participants,
Beneficiaries, and shareholders. The express grant of any
specific power or authority to the Committee, and the taking or
refraining to take of any action by the Committee, shall not be
construed as limiting any power or authority of the Committee.
The Committee may delegate to officers or managers of the Company
and its Affiliates the power and authority, subject to such terms
as the Committee shall determine, to perform such functions,
including administrative functions, as the Committee may
determine, to the extent permitted under applicable law. Each
member of the Committee shall be entitled, in good faith, to rely
or act, or refrain from relying or acting, upon any report or
other information furnished to him or her by any officer or other
employee of the Company or its Affiliates, the Company's
independent public accountants, compensation consultants, or any
other professional retained by the Company to assist in the
administration of the Plan.
4. Eligibility.
Executive officers and other key employees of the Company
and its Affiliates (including any director of the Company who is
also an executive officer or other key employee, but excluding
directors who are not employees), who the Committee determines
hold positions with the potential to impact the long-term
strategic performance of the Company and/or any of its
Affiliates, and to influence shareholder value, are eligible to
be selected to become Participants under the Plan.
5. Awards.
(a) General. The Committee may, from time to time, grant
Awards by taking the following actions, subject to and consistent
with the terms and conditions of the Plan:
(i) Establish and determine the period that will
constitute a Performance Period in accordance with the terms
of the Plan;
(ii) Select executive officers and other key employees
to be granted Awards in respect of such Performance Period;
(iii) Determine the number of Target PSUs granted to
each such Participant, and the Dividend Equivalent PSUs and
Bonus PSUs (expressed as a percentage of the number of
Target PSUs), that may be earned by such Participant in
respect of such Performance Period; provided, however, that,
except in the case of Awards granted under Sections 5(c) or
5(d), the aggregate number of such Target PSUs and Bonus
PSUs shall not exceed 120% of the number of Target PSUs
granted to the Participant, or such other percentage less
than 120% but greater than 100% that the Committee may deem
appropriate;
(iv) Determine the Performance Goal(s) that must be
achieved in order for a Participant to earn PSUs in respect
of the Performance Period, including the Performance Goal
Threshold, the Performance Goal Target, and the Performance
Goal Maximum, the portion of the Target PSUs and Dividend
Equivalent PSUs earned upon achievement of the Performance
Goal Threshold, the basis for determining the portion of the
Target PSUs and Dividend Equivalent PSUs earned if
performance falls between the Performance Goal Threshold and
the Performance Goal Target, and the basis for determining
the portion of Bonus PSUs earned if performance falls
between the Performance Goal Target and the Performance Goal
Maximum; and
(v) Specify the matters relating to settlement, as
set forth in Section 6(b);
provided, however, that, except as provided in Sections 5(c) and
(d), the Committee shall take the actions specified in
(i) through (iv) above not later than 90 days after the beginning
of a Performance Period (but in no event after 25% of such
Performance Period has elapsed), with the Grant Date for such
Awards being the first day of such Performance Period.
(b) Performance Goal(s). Performance Goal(s) may
incorporate such absolute or relative business criterion or
criteria as the Committee may deem necessary or advisable,
including, without limitation, average annual total shareholder
return (Share price appreciation or depreciation plus dividends,
assuming dividend reinvestment), earnings per Share, or other
criteria specified by the Committee, to be achieved over the
Performance Period, specified either by absolute number or as
compared to a specified comparison group of utility companies.
Where more than one such criterion is incorporated into a
Performance Goal, the Committee shall specify the weighting of
each such criterion.
(c) Transition Performance Periods. Transition Performance
Periods shall be established for the one-year period extending
from January 1, 1995 through December 31, 1995, and the two-year
period extending from January 1, 1995 through December 31, 1996.
Additional Transition Performance Periods shall be established
for the one-year period extending from January 1, 1996 through
December 31, 1996 and the two-year period extending from
January 1, 1996 through December 31, 1997. The Awards for such
Transition Performance Periods shall be governed by the
applicable provisions of Section 6 and 7.
(d) Additional Awards During a Performance Period. The
provisions of Section 5(a) notwithstanding, the Committee may
grant an Award to a newly hired or promoted executive officer or
other key employee at any time during a Performance Period;
provided, however, that no such Award may be effective as of a
date later than six months before the stated end date of the
Performance Period. In granting such an Award, the Committee
shall take into account the portion of the Performance Period
already elapsed, the performance achieved during the already
completed portion of the Performance Period, and such other
considerations as the Committee may deem necessary or advisable.
(e) Dividend Equivalent PSUs. The Participant shall have
the right to earn Dividend Equivalent PSUs, as follows:
(i) If the Company declares and pays a dividend or
distribution in the form of cash or property other than
Shares in respect of Shares, the record date for which falls
during a Performance Period or after the Performance Period
but prior to the Settlement Date for such Performance
Period, then, at the payment date therefor, a number of
Dividend Equivalent PSUs shall become potentially earnable
in respect of each Target PSU, and each previously credited
Dividend Equivalent PSU potentially earnable for such
Performance Period in respect of such Target PSU, held as of
the record date for such dividend or distribution, equal to
(A) the amount of cash plus the Fair Market Value of any
property other than Shares actually paid as a dividend or
distribution in respect of each Share at such payment date,
divided by (B) the Fair Market Value of a Share at such
payment date.
(ii) If the Company declares and pays a dividend or
distribution in the form of additional Shares payable in
respect of Shares, or there occurs a forward Share split,
the record date for which falls during a Performance Period
or after the Performance Period but prior to the Settlement
Date, then, at the payment date therefor, a number of
Dividend Equivalent PSUs shall become potentially earnable
in respect of each Target PSU, and each previously credited
Dividend Equivalent PSU potentially earnable in respect of
such Target PSU, held as of the record date for such
dividend or distribution or split, equal to the number of
additional Shares actually paid as a dividend or
distribution or issued in such split in respect of each
Share.
6. Settlement of Awards.
(a) Determination of Number of PSUs Earned. Not later than
90 days after the end of each Performance Period, the Committee
shall determine the extent to which the Performance Goal(s) were
achieved during such Performance Period, the number of Target
PSUs earned (or forfeited), if any, the number of Dividend
Equivalent PSUs earned, if any, and the number of Bonus PSUs
earned, if any.
(b) Settlement Alternatives for PSUs. All PSUs earned in
respect of a given one- or two-year Transition Performance Period
shall be settled in mandatorily deferred DSUs credited under
Section 8(a) until the end of the Performance Period related to
such one- and two-year Transition Performance Periods. At the
end of such Performance Period, mandatorily deferred DSUs shall
be settled in the same manner as earned PSUs. Other than in the
case of PSUs earned in respect of Transition Performance Periods,
Participants may voluntarily elect to have all or a specified
portion of PSUs earned in respect of a Performance Period settled
in cash or Shares (subject to Section 11(a)), deferred to
Deferral Accounts, or deferred as DSUs in a DSU Account in
accordance with Section 8(a); provided, however, that any such
election by a Participant shall be in writing and shall be made
prior to the December 1 that immediately precedes the end of the
Performance Period, may be modified at any time prior to such
date, and shall become irrevocable by the Participant as of such
date. Notwithstanding the foregoing, no deferral election shall
be permitted if the annual amount that is deferred is less than
$3,500. If a Participant fails to make an election, the
Participant shall be deemed to have elected to be paid in cash.
A Participant's election shall apply only to a given Performance
Period, so that the Participant must file a separate election
with respect to separate Performance Periods.
(c) Settlement of PSUs. The Committee shall specify a
Settlement Date for each Performance Period. If PSUs earned are
to be settled in cash or voluntarily deferred to Deferral
Accounts in accordance with Section 8(a), the amount of cash to
be paid or the amount of the deferral for each PSU earned to be
so settled shall equal the Latest Quarter's Average FMV of a
Share as of such Settlement Date. If PSUs earned are to be
settled by issuing Shares to the Participant, subject to Section
11(a), or crediting of DSUs to the Participant's DSU Account, one
Share shall be issued or one DSU credited to the Participant for
each earned PSU to be so settled.
7. Termination of Employment.
(a) Termination During Performance Period -- Effect on
PSUs. Upon a Participant's Termination prior to the end of a
Performance Period, whether voluntary or involuntary, all of the
Participant's Target PSUs relating to such Performance Period
shall be forfeited, and no Dividend Equivalent PSUs or Bonus PSUs
shall be earnable in respect of such Performance Period, except
that in the event of a Participant's Termination due to death,
disability, or Retirement prior to the end of a Performance
Period, but more than six months after the Participant's Grant
Date with respect to such Performance Period, a Pro Rata portion
of his or her Target PSUs awarded for such Performance Period
shall remain outstanding and potentially earnable, and the Pro
Rata portion of his or her Dividend Equivalent PSUs and Bonus
PSUs in respect of such Performance Period shall remain
outstanding and potentially earnable. Such Pro Rata portion of
Target PSUs, Dividend Equivalent PSUs, and Bonus PSUs shall,
following such Termination, remain subject to all of the terms
and conditions of the Plan, including Section 6. Any Target PSUs
in excess of such Pro Rata portion shall be forfeited, and any
Dividend Equivalent PSUs and Bonus PSUs in excess of such Pro
Rata portion shall not be earnable by the Participant (or his or
her Beneficiary).
(b) Termination After Performance Period -- Effect on PSUs.
Upon a Participant's Termination following the end of a
Performance Period, but prior to the Settlement Date for such
Performance Period:
(i) In the event of the Participant's Termination for
Cause, all of the Participant's Target PSUs relating to such
Performance Period shall be forfeited, and no Dividend
Equivalent PSUs or Bonus PSUs shall be deemed to be earned
by the Participant in respect of such Performance Period.
(ii) In the event of the Participant's Termination for
any other reason, such Termination shall have no effect on
his or her rights under Section 6, except as provided in
Section 7(d).
(c) Termination -- Effect on Deferral Accounts and DSU
Accounts. Upon a Participant's Termination at a time that the
Participant maintains a balance in one or more Deferral Accounts
and/or DSU Account, amounts voluntarily deferred in such accounts
shall remain subject to all of the terms and conditions of the
Plan, including any distribution schedule or Participant election
then in effect. In the event of a Participant's Termination for
Cause, all DSUs (including DSUs that were originally credited as
Dividend Equivalent DSUs) credited to his or her DSU Account then
subject to a period of mandatory deferral in respect of a
Transition Performance Period shall be forfeited.
(d) No Deferral From Award After Termination. If
settlement of a Participant's Award is due under the provisions
of Section 6(b) after a Termination, any PSUs earned shall be
settled in cash or Shares (subject to Section 11(a)), with no
voluntary deferral possible.
8. Voluntary Deferrals.
(a) Deferral Accounts and DSU Accounts; Switching. If PSUs
earned are to be voluntarily settled in Deferral Accounts under
this Section 8(a), the amount of such deferral determined in
accordance with Sections 6(b) and (c) shall be credited to the
Participant's Deferral Accounts as of the Settlement Date. The
Participant shall specify in the manner designated by the
Committee or its delegate, in whole numbers, the percentage of
his or her deferrals to the Deferral Accounts which shall be
invested in each available deemed investment alternative;
provided, however, that the percentage for each such deemed
investment alternative must be at least 10%. If a Participant
fails to select a deemed investment alternative, he or she shall
be deemed to have failed to make a valid deferral election with
respect to any amounts which were credited to the Deferral
Accounts. If PSUs earned are to be settled by deferral to the
DSU Account under this Section 8(a), the number of DSUs
determined in accordance with Sections 6(b) and (c) shall be
credited to the Participant's DSU Account as of the Settlement
Date.
A Participant may, by filing a written quarterly election
with the Vice President of Human Resources, reallocate or switch
amounts credited to his or her Deferral Accounts between and
among different deemed investment alternatives then available for
Deferral Account investment. Reallocation shall be made as of
the last business day of a calendar quarter, reallocations must
be in whole percentages, and the amount allocated to any
investment alternative selected must be at least 10% of the value
of the Participant's Deferral Accounts as of such last business
day of the calendar quarter. At no time may a Participant
reallocate or switch amounts from his or her Deferral Accounts to
his or her DSU Account, nor reallocate or switch DSUs credited to
his or her DSU Account to his or her Deferral Accounts.
The election among the available investment alternatives
shall be the sole responsibility of each Participant. The
Company, the Committee, and their delegates are not authorized to
make any recommendations to any Participant with respect to such
election. Each Participant assumes all risk in connection with
any election of deemed investment alternatives and the adjustment
to the value of his or her Deferral Accounts as the result of
changes to the value of such deemed investment alternatives.
Neither the Company nor the Committee in any way guarantees
against loss with respect to Deferral Accounts.
All payments from the Deferral Accounts shall be made
proportionately from each such Deferral Account, based upon the
value of each Deferral Account as of the valuation date used for
payment.
(b) Crediting of Interest and Other Earnings to Deferral
Accounts. Interest and other earnings and appreciation shall be
credited on the amounts deferred to Deferral Accounts as of the
last business day of each calendar month, and for the purposes of
determining the amount to be distributed from a Deferral Account
in accordance with Section 8(d), such Account shall be valued,
and interest and other earnings shall be credited thereto, as of
the final business day of the calendar year which precedes the
calendar year of distribution.
(c) Crediting of Dividend Equivalent DSUs to DSU Account.
Dividend Equivalent DSUs shall be credited to a Participant's DSU
Account as follows:
(i) If the Company declares and pays a dividend or
distribution in the form of cash or property other than
Shares in respect of Shares, the record date for which falls
while any DSUs are credited to the Participant's DSU
Account, then, at the payment date therefor, a number of
Dividend Equivalent DSUs shall be credited to the
Participant's DSU Account in respect of each DSU, including
each DSU that was originally credited as a Dividend
Equivalent DSU, credited to such Account as of the record
date for such dividend or distribution, equal to (A) the
amount of cash plus the Fair Market Value of any property
other than Shares actually paid as a dividend or
distribution in respect of each Share at such payment date,
divided by (B) the Fair Market Value of a Share at such
payment date.
(ii) If the Company declares and pays a dividend or
distribution in the form of additional Shares payable in
respect of Shares, or there occurs a forward Share split,
the record date for which falls while any DSU's are credited
to the Participant's DSU Account, then, at the payment date
therefor, a number of Dividend Equivalent DSUs shall be
credited to the Participant's DSU Account in respect of each
DSU, and each previously credited Dividend Equivalent DSU,
credited to such Account as of the record date for such
dividend or distribution or split, equal to the number of
additional Shares actually paid as a dividend or
distribution or issued in such split in respect of each
Share.
(d) Time of Distributions. The Participant shall make a
written election, at the time he or she makes an election under
Section 6(b) or such other time as the Committee may specify,
with respect to the time of distribution from his or her Deferral
Accounts and DSU Account. A Participant may elect to receive
such distribution in one lump-sum payment or in some other number
of ratable annual installments (not exceeding 10); provided,
however, that installments will only be available if, as of the
valuation date for the initial distribution, the total of (i) the
amounts in his or her Deferral Accounts and DSU Account, and
(ii) any accounts maintained under the Orange and Rockland
Utilities, Inc. Eligible Employees' Compensation Plan is greater
than $25,000.
The lump-sum payment or the first installment, as elected by
the Participant, shall be distributed as soon as practicable
after the following date, as elected by the Participant: (i) the
first business day of the calendar year immediately following the
calendar year of the Participant's Termination; or (ii) the first
business day of such later calendar year as the Participant shall
have elected. Subsequent installments, if any, shall be
distributed as soon as practicable after the first business day
of each succeeding calendar year until the entire amount credited
to the Participant's Deferral Account and DSU Account shall have
been distributed.
The "ratable" amount distributable in any given installment
shall equal the sum of the values of the Deferral Account and the
DSU Account, divided by the number of installments (including the
given installment) remaining to be distributed. Installments
shall be paid initially from the Deferral Accounts. When the
Deferral Accounts have a zero balance, the remaining payments
shall be made from the DSU Account.
A Participant may, while an employee of the Company or any
of its Affiliates, at any time modify any election then in effect
with respect to the distribution of amounts credited to his or
her Deferral Accounts or DSU Account without penalty; provided,
however, that any such modification may only provide for the
further deferral of such amounts. In the event that a
Participant has made more than one modification of his or her
distribution election with respect to amounts credited to his or
her Deferral Accounts and DSU Account, the most recent such
modification shall control the distribution of such amounts. Any
modification of a Participant's distribution election shall
become effective upon the filing of such written election with
the Vice President of Human Resources of the Company.
(e) Special Distributions. The terms of Section
8(d) notwithstanding, the following special distributions shall
be made:
(i) If a Participant becomes employed by any
governmental agency having jurisdiction over the activities
of the Company or any of its Affiliates, then the Company
shall distribute to such Participant, in a single lump-sum
cash payment, as soon as practicable after the last day of
the calendar month in which such employment commences, the
entire amount remaining credited to each of the
Participant's Deferral Accounts and his or her DSU Account.
(ii) If a Participant dies before distribution in full
of the entire amount credited to his or her Deferral
Accounts and DSU Account, the Company shall distribute to
such Participant's Beneficiary, in a single lump-sum cash
payment, as of the first business day of the calendar year
immediately following the year of death, the entire amount
remaining credited to each of the Participant's Deferral
Accounts and his or her DSU Account.
(f) In-Service Withdrawals. The terms of Section
8(d) notwithstanding, the following in-service withdrawals may be
made in accordance with the following provisions:
(i) The Committee may permit without penalty a
distribution in the form of a withdrawal of all or a portion
of the amount credited to the Participant's Deferral
Accounts and his or her DSU Account if, upon the written
request of the Participant or the Participant's
representative, or following the death of the Participant
upon the written request of the Participant's Beneficiary or
such Beneficiary's representative, the Committee determines
that the Participant or Beneficiary, as the case may be, is
confronted with an unforeseeable emergency. For this
purpose, an unforeseeable emergency is an unanticipated
emergency caused by an event that is beyond the control of
the Participant or Beneficiary and that would result in
severe financial hardship to the Participant or Beneficiary
if an early hardship withdrawal were not permitted. The
Participant or Beneficiary shall provide to the Committee
such evidence as the Committee may require to demonstrate
that such emergency exists and financial hardship would
occur if the withdrawal were not permitted. Any such
withdrawal under this Section 8(f) shall be limited to the
amount necessary to meet the emergency.
(ii) At any time prior to his or her termination of
employment from the Company and all Affiliates, a
Participant may elect to withdraw all or any portion of the
amount credited to his or her Deferral Accounts and DSU
Account (other than amounts in excess of the "Rule 16b-3
Limited Settlement Value"), subject to a 10% withdrawal
penalty. Amounts in the Participant's DSU Account in excess
of the Rule 16b-3 Limited Settlement Value may also be
withdrawn subject to a 10% withdrawal penalty, if such
withdrawal is approved by the Committee in its sole
discretion. The Participant may make such an election by
filing a written notice with the Committee or its designee
on a form provided by the Committee or its designee, and the
amount withdrawn shall be paid to the Participant in a lump
sum payment. Upon the payment of such withdrawal, (A) an
amount equal to one-tenth of the amount withdrawn shall be
forfeited, and (B) the Participant's deferral election shall
be voided through the end of the following calendar year.
The "Rule 16b-3 Limited Settlement Value" as of a given
distribution date shall mean the number of DSUs originally
credited to the DSU Account more than 6 months before such
distribution date plus any Dividend Equivalent DSUs that are
credited to such DSUs or to previous Dividend Equivalent
DSUs with respect to such DSUs.
(iii) In-Service Withdrawals shall be made as soon as
practicable after the end of the calendar month in which the
notice of withdrawal is received by the Committee (or, if
later, the end of the calendar month in which any necessary
approval is granted by the Committee), and the amounts
withdrawn shall be distributed in the following order:
(A) the Deferral Accounts, and (B) the DSU Account.
(g) Distribution of Cash or Shares. Distributions from a
Participant's Deferral Accounts shall be made solely in cash, and
distributions from a Participant's DSU Account may be made in
cash or, subject to Section 11(a), in Shares.
In the case of a distribution relating to a Deferral Account
involving an event under Section 8(d) or 8(e)(ii), cash shall be
distributed based on the balance credited to the Deferral Account
as of the last business day of the calendar year prior to the
calendar year of distribution. In the case of a distribution
from a Deferral Account relating to an event in Section 8(e)(i)
or Section 8(f), cash shall be distributed based on the balance
credited to the Deferral Account as of the final business day of
the calendar month preceding the calendar month of distribution.
In the case of a cash distribution from a DSU Account under
Section 8(d) or 8(e), the amount of cash distributed shall equal
the Latest Quarter's Average FMV as of such distribution date for
each DSU subject to the distribution. In the case of a cash
distribution from a DSU Account under Section 8(f), the DSU
Account shall be valued based upon the Fair Market Value of a
Share as of the final business day of the calendar month prior to
the calendar month of distribution. There will be no further
distribution from the Plan with respect to such cashed-out DSUs,
except as otherwise provided in the final sentence of this
paragraph. In the case of a distribution of Shares relating to a
DSU Account, one Share shall be issued for each full DSU subject
to the distribution, and any fractional shares shall be paid in
accordance with Section 11(b). Any distribution from the DSU
Account shall be subject to adjustment pursuant to Sections 8(c)
and 10.
9. Change in Control; Potential Change in Control.
(a) Effect of Change in Control or Potential Change in
Control. Other provisions of the Plan notwithstanding, upon the
occurrence of a Change in Control or a Potential Change in
Control during a Performance Period, all of the Target PSUs and
Dividend Equivalent PSUs shall be deemed to be earned as of the
date of such event. As soon as practicable after any Change in
Control or Potential Change in Control, the Company shall pay to
each Participant (or his or her Beneficiary) a lump-sum cash
distribution equal to (i) the number of Target PSUs and Dividend
Equivalent PSUs deemed earned by the Participant under this
Section 9(a), multiplied by the Fair Market Value of a Share as
of the date immediately preceding the Change in Control or the
Potential Change in Control; plus (ii) the entire unpaid balance
of the Participant's Deferral Accounts as of the date immediately
preceding the Change in Control or Potential Change in Control;
plus (iii) the number of DSUs, including Dividend Equivalent
DSUs, credited to the Participant's DSU Account as of the date of
the Change in Control or the Potential Change in Control,
multiplied by the Fair Market Value of a Share as of the date
immediately preceding the Change in Control or the Potential
Change in Control; plus (iv) if, in connection with any dividend,
distribution, or forward Share split, the record date is before,
but the payment date is after, the date of the distribution under
this Section 9(a), the amount of cash plus the Fair Market Value
of any Shares or other property payable or issuable as a dividend
or distribution on each Share multiplied by the number of PSUs
and DSUs settled in accordance with clauses (i) and (iii) of this
sentence. The payment of the amounts set forth in this Section
9(a) shall constitute a settlement in full of all of a
Participant's rights under the Plan (including his or her Award
Accounts), and will result in the cancellation of all of the
Participant's PSUs, DSUs, Deferral Accounts, and DSU Account.
(b) A "Change in Control" shall be deemed to have occurred
if the event set forth in any one of the following paragraphs
shall have occurred:
(i) any Person (as hereinafter defined) is or becomes
the Beneficial Owner (as hereinafter defined), directly or
indirectly, of securities of the Company (not including in
the securities Beneficially Owned by such Person any
securities acquired directly from the Company or its
Affiliates other than in connection with the acquisition by
the Company or its Affiliates of a business) representing
20% or more of either the then-outstanding Shares or the
combined voting power of the Company's then-outstanding
securities; or
(ii) the following individuals cease for any reason to
constitute a majority of the number of Directors then
serving: individuals who, on April 1, 1997, constituted the
Board of Directors of the Company and any new Director
(other than a Director whose initial assumption of office is
in connection with an actual or threatened election contest,
including but not limited to a consent solicitation,
relating to the election of Directors of the Company (as
such terms are used in Rule 14a-11 of Regulation 14A under
the Exchange Act)) whose appointment or election by the
Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds
(2/3) of the Directors then still in office who either were
Directors on April 1, 1997 or whose appointment, election or
nomination for election was previously so approved; or
(iii) the shareholders of the Company approve a merger
or consolidation of the Company with any other corporation
or approve the issuance of voting securities of the Company
in connection with a merger or consolidation of the Company
(or any direct or indirect subsidiary of the Company)
pursuant to applicable stock exchange requirements, other
than (A) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or
any parent thereof), in combination with the ownership of
any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, at least 65% of the
combined voting power of the voting securities of the
Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation,
or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not including
in the securities Beneficially Owned by such Person any
securities acquired directly from the Company or its
Affiliates other than in connection with the acquisition by
the Company or its Affiliates of a business) representing
20% or more of either the then-outstanding Shares or the
combined voting power of the Company's then-outstanding
securities; or
(iv) the shareholders of the Company approve a plan of
complete liquidation or dissolution of the Company or an
agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets, other than a
sale or disposition by the Company of all or substantially
all of the Company's assets to an entity, at least 65% of
the combined voting power of the voting securities of which
are owned by Persons in substantially the same proportions
as their ownership of the Company immediately prior to such
sale.
Notwithstanding the foregoing, no "Change in Control" shall be
deemed to have occurred if there is consummated any transaction
or series of integrated transactions immediately following which
the record holders of Shares immediately prior to such
transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity that
owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.
(c) A "Potential Change in Control" shall be deemed to have
occurred if the event set forth in any one of the following
paragraphs shall have occurred:
(i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a
Change in Control;
(ii) the Company or any Person publicly announces an
intention to take or to consider taking actions that, if
consummated, would constitute a Change in Control;
(iii) any Person becomes the Beneficial Owner, directly
or indirectly, of securities of the Company representing 10%
or more of either the then-outstanding Shares or the
combined voting power of the Company's then-outstanding
securities; or
(iv) the Board of Directors adopts a resolution to the
effect that, for purposes of any severance agreement to
which the Company is a party, a Potential Change in Control
has occurred.
(d) "Beneficial Owner" shall have the meaning set forth in
Rule 13d-3 under the Exchange Act.
(e) "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof, except that such term shall not include
(i) the Company or any of its "Affiliates", (ii) a trustee or
other fiduciary holding securities under an employee benefit plan
of the Company or any of its Affiliates, (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly,
by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
10. Adjustments.
If the Committee shall determine that a dividend or other
distribution (whether in the form of cash, Shares, or other
property) that is unusual and non-recurring, forward or reverse
Share split, recapitalization, reorganization, merger,
consolidation, share exchange, or other extraordinary transaction
affects the Shares such that an adjustment is appropriate in
order to prevent dilution or enlargement of the rights of
Participants under the Plan, the Committee shall make such
adjustments as it may deem necessary or advisable (taking into
account the operation of Sections 5(e) and 8(c), in connection
with dividends, distributions, and forward Share splits), (i) in
respect of any Award not yet settled, to the number of Target
PSUs granted to each Participant, the right to earn Dividend
Equivalent PSUs granted to each Participant, and the right to
earn Bonus PSUs granted to each Participant; (ii) to the number
of DSUs credited to a Participant's DSU Account; (iii) to the
number and kind of securities that constitute a Share; and
(iv) to the number of Shares, if any, reserved for issuance under
Section 11(a). In addition, the Committee is authorized to make
such adjustments as it may deem necessary or advisable in the
terms and conditions of Performance Goal(s) and related matters
specified under Section 5(a)(iv) in recognition of unusual or
non-recurring events (including, without limitation, events
described in the preceding sentence, as well as acquisitions and
dispositions of businesses and assets) affecting the Company or
any of its Affiliates or its or their business units, or in
response to changes in applicable laws, regulations, accounting
principles, tax rates and regulations, or business conditions or
in view of the Committee's assessment of the business strategy of
the Company or any of its Affiliates or its or their business
units, performance of comparable organizations, economic and
business conditions, and other circumstances deemed relevant.
11. Miscellaneous.
(a) Limitations on Use of Shares. Other provisions of the
Plan notwithstanding, no Shares may be issued in settlement of
earned PSUs or in a distribution of DSUs from a DSU Account
unless, prior to such issuance, the Plan has been approved by
such vote of shareholders of the Company and by any government or
regulatory body as may be necessary or advisable to satisfy all
applicable legal requirements, including, without limitation,
obligations imposed by any national securities exchange or
automated interdealer quotation system on which the Company's
equity securities may then be listed or quoted. If Shares become
issuable under the Plan, the maximum number of Shares which may
be issued shall be as approved by the Company's shareholders,
subject to adjustment as provided under Section 10. The
foregoing notwithstanding, no PSU earned and no DSU credited
prior to August 15, 1996, no Dividend Equivalent DSU credited at
any time in respect of either a DSU credited prior to August 15,
1996, or Dividend Equivalent DSUs previously credited on such
DSUs or Dividend Equivalent DSUs, and no other PSU or DSU which
the Company determines qualifies as an excluded "cash-only"
instrument under Rule 16a-1(c)(3) under the Exchange Act in
effect immediately prior to August 15, 1996, shall be settled by
issuance of Shares.
(b) Calculation of PSUs and DSUs; Fractional Shares. The
number of PSUs potentially earnable, and the number of DSUs
credited to a DSU Account, shall for all purposes be calculated
to not less than three decimal places. If Shares are issued
under the Plan (subject to Section 11(a)), no fractional shares
shall be issued, but in lieu thereof the Company shall pay cash
based on the Fair Market Value of a Share at the date of
issuance.
(c) Tax Withholding. The Company shall deduct from any
cash settlement of a Participant's PSUs earned or any cash
distribution relating to a Participant's Deferral Accounts or DSU
Account any Federal, state, or local withholding or other taxes
or charges which the Company is from time to time required to
deduct under applicable law. In addition, if any Shares are
issued in settlement of a Participant's PSUs earned, or in a
distribution from the Participant's DSU Account, the Company may
deduct from any other payment due to the Participant, require the
Participant to separately pay the amount of, or withhold from the
Shares being issued such number of Shares having an aggregate
Fair Market Value equal to, any Federal, state, or local
withholding or other taxes or charges which the Company is from
time to time required to deduct under applicable law.
(d) Designation of Beneficiaries. Each Participant may
file with the Vice President of Human Resources of the Company a
written designation of one or more persons as a Beneficiary;
provided, however, that if the Participant has a spouse, the
spouse shall be the Participant's Beneficiary unless the spouse
consents in a notarized writing, on a form provided by or
acceptable to the Committee or its designee, to the designation
of the non-spouse Beneficiary. A Participant may at any time and
from time to time revoke or change the Participant's Beneficiary
designation by filing a new designation with the Vice President
of Human Resources, subject to the spousal consent requirements
set forth in the preceding sentence. The last such Beneficiary
designation received by the Vice President of Human Resources
shall be controlling; provided, however, that no designation or
revocation or change thereof shall be effective unless received
by the Vice President of Human Resources prior to the
Participant's death. If the Vice President of Human Resources is
in doubt as to the right of any person to receive settlements or
distributions under the Plan, the Company may delay the
settlement or distribution until the Committee determines the
rights thereto, or the Company may pay the settlement or
distribution amount into any New York State or Federal Court of
appropriate jurisdiction, and such payment shall be a complete
discharge of the liability of the Company therefor.
(e) Non-Transferability. Neither a Participant nor any
Beneficiary shall have the right to, directly or indirectly,
alienate, assign, transfer, pledge, anticipate, or encumber
(except by reason of death) any PSU, DSU, amount credited to a
Deferral Account or a DSU Account, or other right hereunder, nor
shall any such PSU, DSU, amount credited to a Deferral Account or
a DSU Account, or other right be subject to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors of the Participant or any
Beneficiary, or to the debts, contracts, liabilities,
engagements, or torts of the Participant or any Beneficiary or
transfer by operation of law in the event of bankruptcy or
insolvency of the Participant or any Beneficiary, or any legal
process.
(f) No Rights to Awards; No Shareholder Rights; No Right to
Employment. No Participant or employee shall have any claim to
be granted any Award under the Plan, and there is no obligation
for uniformity of treatment of Participants and employees. No
PSU, DSU, amount credited to a Deferral Account or a DSU Account,
or other right under the Plan shall confer on any Participant any
of the rights of a shareholder of the Company unless and until
Shares are duly issued (subject to Section 11(a)) to the
Participant in settlement of PSUs earned or in a distribution
from the Participant's DSU Account. Neither the Plan nor any
action taken hereunder shall be construed as giving any
Participant or employee the right to be retained in the employ of
the Company or any of its Affiliates, nor shall it interfere in
any way with the right of the Company or any such Affiliate to
terminate any employee's employment at any time.
(g) Payments Under Plan; Unfunded Status of Plan. All cash
settlements or distributions provided for under the Plan shall be
made by check from the general funds of the Company as soon as
practicable after the applicable valuation date provided in the
Plan; provided, however, that such settlements and distributions
shall be reduced by the amount of any payments made to the
Participant or his or her Beneficiary from the trust (the
"Trust") established by the Company to assist it in making such
payments.
No Participant or Beneficiary shall have any right, title,
or interest whatsoever in or to any assets of the Trust. To the
extent that any person acquires a right to receive payments from
the Company hereunder, such right shall be no greater than the
right of an unsecured creditor of the Company.
(h) Award Account Statements; Plan Copies. Each
Participant or his or her Beneficiary shall receive a statement
no less frequently than annually with respect to each of his or
her Award Accounts as of the close of the preceding calendar
year. In addition, copies of the Plan and any and all amendments
thereto shall be made available to all Participants and
Beneficiaries at all reasonable times at the office of the Vice
President of Human Resources of the Company.
(i) Plan Effective Date; Amendments and Termination. The
Plan shall be effective as of January 1, 1995. The Board of
Directors may at any time amend or terminate the Plan; provided,
however, that no amendment or termination of the Plan shall
materially impair the rights of any Participant or Beneficiary
under the Plan.
(j) Compliance with Rule 16a-1(c)(3) and Rule 16b-3. It is
the intent of the Company that, in the case of any Participant
who is then subject to Section 16 of the Exchange Act with
respect to the Company, (i) any PSU earned and DSU credited prior
to August 15, 1996, any Dividend Equivalent DSU credited at any
time in respect of either a DSU credited prior to August 15,
1996, or a Dividend Equivalent DSU previously credited on such a
DSU or Dividend Equivalent DSU, and any other PSU or DSU that the
Company determines qualifies as an excluded "cash-only"
instrument under Rule 16a-1(c)(3)(i) under the Exchange Act in
effect immediately prior to August 15, 1996, shall at all times
continue to qualify as an excluded "cash-only" instrument under
that Rule; (ii) the grant of any other Award, the earning of any
other PSUs, the payment of cash, issuance of Shares, or crediting
of any other DSUs in settlement of such other PSUs, the
distribution of cash or issuance of Shares from a DSU Account
relating to such other PSUs or DSUs, and any other transaction
relating to such other PSUs or DSUs, shall be exempt from Section
16(b) liability under Rule 16b-3(d)(1) or (e) under the Exchange
Act as in effect on and after August 15, 1996, or such other
exemptions from Section 16(b) liability as may be available at
the time; and (iii) transactions relating to Dividend Equivalent
PSUs and Dividend Equivalent DSUs shall be exempt from Section
16(a) reporting and 16(b) liability under Rule 16a-11.
Accordingly, the Plan shall be construed in a manner consistent
with the applicable requirements of such Rules under Section 16,
and, if any provision of the Plan does not comply with any such
applicable requirement, then such provision shall be construed or
deemed amended to the extent necessary to conform to such
applicable requirement.
(k) Arbitration. All disputes and controversies arising
out of or relating to the Plan or any Award shall be settled
exclusively by arbitration in New York, New York, in accordance
with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any
State or Federal Court sitting in the State of New York having
jurisdiction thereof. Notwithstanding any provision of the Plan
or any Award to the contrary, Participants and Beneficiaries
shall be entitled to seek in any State or Federal Court sitting
in the State of New York having jurisdiction thereof specific
performance of their respective rights to receive settlements and
distributions provided for in the Plan during the pendency of any
such dispute or controversy arising out of or relating to the
Plan.
(l) Governing Law; Jurisdiction. The Plan and any Award
shall be governed by and construed in accordance with the laws of
the State of New York, as from time to time in effect, without
regard to the conflicts of law rules thereof, and applicable
federal law. By his or her acceptance of an Award under the Plan
each Participant and his or her Beneficiary and any other person
claiming from or through them shall be deemed to irrevocably
submit to the exclusive jurisdiction of any State or Federal
Court sitting in the State of New York over any suit, action, or
proceeding arising out of or relating to the Plan, and such
persons agree and consent that, to the extent provided for under
applicable law, all service of process in any such suit, action,
or proceeding in any State or Federal Court sitting in the State
of New York may be made by certified or registered mail, return
receipt requested, directed to him or her at the address
indicated in the records of the Company, unless the Company has
otherwise been notified in writing of a new address, and service
so made shall be complete 10 days after the same shall have been
so mailed.
ORANGE AND ROCKLAND UTILITIES, INC.
ELIGIBLE EMPLOYEES' INSURANCE PROGRAM
Effective July 1, 1997
ORANGE AND ROCKLAND UTILITIES, INC.
ELIGIBLE EMPLOYEES' INSURANCE PROGRAM
1. Eligibility
Each Officer of Orange and Rockland Utilities, Inc.
(the "Company"), or an Affiliate (as defined below) which has
been designated as a participating entity by the Company's Board
of Directors (a "Designated Affiliate"), is eligible to
participate in the Orange and Rockland Utilities, Inc. Eligible
Employees' Insurance Program (the "Program"). In addition, each
non-Officer employee of the Company or a Designated Affiliate who
is in salary grade 14 or above and who is designated for
participation by the Company's Vice President of Human Resources
shall be eligible to participate in the Program. Any individual
who is eligible to participate hereunder shall be referred to as
an "Eligible Employee".
For purposes of this Program, an "Affiliate" is an
entity which must be aggregated with the Company in accordance
with Sections 414(b), 414(c), 414(m), or 414(o) of the Internal
Revenue Code of 1986, as amended.
2. Participation
Each Eligible Employee shall become a participant in
the Program (a "Participant") immediately upon becoming an
Eligible Employee, provided that such Eligible Employee is then
insurable at standard life insurance rates. Notwithstanding the
foregoing, no Eligible Employee shall become a Participant
hereunder prior to the later of (i) July 1, 1997, or (ii) the
issuance of an insurance policy providing the benefits payable
under the Program with respect to that Eligible Employee.
An Eligible Employee who becomes a Participant shall
remain a Participant until the earlier of (i) his or her death,
or (ii) his or her termination of employment from the Company and
all Designated Affiliates prior to retirement under the terms of
the qualified retirement plan of the Company or Designated
Affiliate that covers the Participant ("Retirement").
3. Life Insurance Benefit
(a) Each Participant shall receive life insurance
coverage which will provide a death benefit equal to: (1) two
times the Participant's base salary from the Company or a
Designated Affiliate as in effect at the date of the
Participant's death, if the Participant dies while employed by
the Company or a Designated Affiliate; or (2) $25,000, if the
Participant dies after Retirement. A Participant under the
Program will not be eligible to participate in the basic group
life insurance program that is maintained for other employees of
the Company or its Affiliates, but will be eligible to purchase
supplemental life insurance coverage in accordance with the terms
of the separate supplemental life insurance program that is
maintained for employees of the Company or its Affiliates.
(b) Any life insurance policy purchased to provide
benefits under this Section 3 (a "Policy") shall be subject to
certain conditions set forth in a "Split-Dollar Life Insurance
Agreement" between the Participant, the Company, and the trustee
of any trust which holds the Policy, pursuant to which the
Participant may designate a beneficiary (the "Beneficiary") with
respect to the portion of the Policy proceeds payable in
accordance with the preceding paragraph in the event the
Participant dies while life insurance coverage is in effect. The
Participant shall have the right to designate and change such
Beneficiary in accordance with the terms of the Split-Dollar Life
Insurance Agreement, with such change to be effective when
received by the insurance company. If no such Beneficiary
designation is on file with the insurance company as of the
Participant's date of death, the death benefit described in the
preceding paragraph shall be paid in accordance with the terms of
the Policy.
(c) The death benefit payable pursuant to paragraph
(a) shall not be paid if the insurance company fails to issue a
Policy on the life of the Participant and shall be subject to all
conditions and exceptions set forth in the applicable Policy.
(d) Notwithstanding any provision of this Program or
any other document to the contrary, the life insurance death
benefit provided under paragraph (a) shall be payable solely from
the proceeds of the Policy, if any.
4. Miscellaneous
(a) Each Participant is responsible for the payment of
any current taxes which are imposed upon such Participant as a
result of the life insurance coverage provided to such
Participant under this Program.
(b) Copies of the Program and any and all amendments
thereto shall be made available to all Participants and
Beneficiaries at all reasonable times at the office of the Vice
President of Human Resources.
(c) The Program shall be administered by the Orange
and Rockland Utilities, Inc. Retirement Committee (the
"Committee"), which shall have full power, discretion, and
authority to interpret, construe, and administer the Program and
any part thereof. The Committee's interpretations and
constructions of the Program, and the actions taken thereunder by
the Committee, shall, except as otherwise determined by the Board
of Directors of the Company, be binding and conclusive on all
persons for all purposes. Any Participant or Beneficiary claims,
except for those claims regarding the benefits payable under a
Policy, shall be resolved by the Committee in accordance with
procedures which it shall establish.
To the extent that a Participant or Beneficiary has a
claim regarding the benefits payable under a Policy, such claim
shall be filed with the insurance company issuing such policy,
and such insurance company shall be responsible for making a
decision with respect to such claim.
(d) The Board of Directors may at any time prior to a
Change in Control or Potential Change in Control (as defined in
Section 5) amend or terminate the Program. After a Change in
Control or Potential Change in Control, the Board of Directors
may not terminate or amend the Program, other than to make
amendments which are necessary in order to comply with applicable
law.
(e) The Company, its officers, and its Board of
Directors shall have the right to rely upon a written opinion of
legal counsel, which may be independent legal counsel or legal
counsel regularly employed by the Company, if any question should
arise as to any obligation under the Program.
(f) All elections, designations, requests, notices,
instructions and other communications from an Eligible Employee,
Participant, Beneficiary, or other person to the Committee or the
Board of Directors of the Company, required or permitted under
the Program, shall be in such form as is prescribed from time to
time by the Committee and shall be mailed by first class mail or
delivered to such location as shall be specified by the
Committee.
(g) The terms of the Program shall be binding upon the
Company and its successors and assigns.
(h) The Program shall be governed by and construed in
accordance with the laws of the State of New York, as from time
to time in effect, and any applicable federal laws.
(i) The Program is effective as of July 1, 1997.
5. Change in Control
(a) Notwithstanding anything else herein to the
contrary, in the event of the occurrence of a Change in Control
or Potential Change in Control, if any, the Company shall
continue to make premium payments to keep life insurance coverage
in force with respect to each Participant, for so long as that
Participant remains entitled to coverage hereunder.
(b) A "Change in Control" shall be deemed to have
occurred if the event set forth in any one of the following
paragraphs shall have occurred:
(i) any Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company
(not including in the securities beneficially owned by such
Person any securities acquired directly from the Company or
its affiliates other than in connection with the acquisition
by the Company or its affiliates of a business) representing
20% or more of either the then-outstanding Company Common
Stock, $5 par value per share (or any successor common
stock) ("Shares") or the combined voting power of the
Company's then-outstanding securities;
(ii) the following individuals cease for any
reason to constitute a majority of the number of Directors
then serving: individuals who, on April 1, 1997,
constituted the Board of Directors of the Company and any
new Director (other than a Director whose initial assumption
of office is in connection with an actual or threatened
election contest, including, but not limited to, a consent
solicitation, relating to the election of Directors of the
Company (as such terms are used in Rule 14a-11 of Regulation
14A under the Exchange Act)) whose appointment or election
by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds
(2/3) of the Directors then still in office who either were
Directors on April 1, 1997 or whose appointment, election or
nomination for election was previously so approved;
(iii) the shareholders of the Company approve a
merger or consolidation of the Company with any other
corporation or approve the issuance of voting securities of
the Company in connection with a merger or consolidation of
the Company (or any direct or indirect subsidiary of the
Company) pursuant to applicable stock exchange requirements,
other than (A) a merger or consolidation which would result
in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or
any parent thereof), in combination with the ownership of
any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, at least 65% of the
combined voting power of the voting securities of the
Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation,
or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not including
in the securities beneficially owned by such Person any
securities acquired directly from the Company or its
affiliates other than in connection with the acquisition by
the Company or its affiliates of a business) representing
20% or more of either the then-outstanding Shares or the
combined voting power of the Company's then-outstanding
securities; or
(iv) the shareholders of the Company approve a
plan of complete liquidation or dissolution of the Company
or an agreement for the sale or disposition by the Company
of all or substantially all of the Company's assets, other
than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, at
least 65% of the combined voting power of the voting
securities of which are owned by Persons in substantially
the same proportions as their ownership of the Company
immediately prior to such sale.
Notwithstanding the foregoing, no "Change in Control"
shall be deemed to have occurred if there is consummated any
transaction or series of integrated transactions immediately
following which the record holders of Shares immediately prior to
such transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity which
owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.
(c) "Potential Change in Control" shall be deemed to
have occurred if the event set forth in any one of the following
paragraphs shall have occurred:
(i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a
Change in Control;
(ii) the Company or any Person publicly announces
an intention to take or to consider taking actions which if
consummated, would constitute a Change in Control;
(iii) any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing 10% or more of either the then-outstanding
securities; or the combined voting power of the Company's
then-outstanding securities; or
(iv) the Board of Directors adopts a resolution
to the effect that, for purposes of any severance agreement
to which the Company is a party, a Potential Change in
Control has occurred.
(d) "Beneficial Owner" shall have the meaning set forth
in Rule 13d-3 under the Exchange Act.
(e) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
(f) "Person" shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof, except that such term shall not
include (i) the Company or any of its affiliates (as defined in
Rule 12b-2 promulgated under the Exchange Act), (ii) a trustee or
other fiduciary holding securities under an employee benefit plan
of the Company or any of its affiliates, (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly,
by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONSTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ORANGE AND
ROCKLAND UTILITIES, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED
JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 912,561
<OTHER-PROPERTY-AND-INVEST> 10,641
<TOTAL-CURRENT-ASSETS> 169,969
<TOTAL-DEFERRED-CHARGES> 150,974
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,244,145
<COMMON> 68,274
<CAPITAL-SURPLUS-PAID-IN> 127,517
<RETAINED-EARNINGS> 169,461
<TOTAL-COMMON-STOCKHOLDERS-EQ> 365,252
0
43,226
<LONG-TERM-DEBT-NET> 276,648
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 107,551
<LONG-TERM-DEBT-CURRENT-PORT> 78,025
0
<CAPITAL-LEASE-OBLIGATIONS> 1,721
<LEASES-CURRENT> 164
<OTHER-ITEMS-CAPITAL-AND-LIAB> 371,558
<TOT-CAPITALIZATION-AND-LIAB> 1,244,145
<GROSS-OPERATING-REVENUE> 322,514
<INCOME-TAX-EXPENSE> 10,394
<OTHER-OPERATING-EXPENSES> 277,658
<TOTAL-OPERATING-EXPENSES> 288,052
<OPERATING-INCOME-LOSS> 34,462
<OTHER-INCOME-NET> (12,649)
<INCOME-BEFORE-INTEREST-EXPEN> 21,813
<TOTAL-INTEREST-EXPENSE> 15,891
<NET-INCOME> 5,922
1,399
<EARNINGS-AVAILABLE-FOR-COMM> 4,523
<COMMON-STOCK-DIVIDENDS> 17,614
<TOTAL-INTEREST-ON-BONDS> 12,161
<CASH-FLOW-OPERATIONS> 28,806
<EPS-PRIMARY> 0.33
<EPS-DILUTED> 0
</TABLE>
ORANGE AND ROCKLAND
PRESIDENT AND CHIEF OPERATING OFFICER
LEAVES COMPANY
Pearl River, NY, August 8, 1997 - Effective today, Larry S.
Brodsky, Orange and Rockland's President and Chief Operating
Officer, has left the Company to pursue other interests. Mr.
Brodsky had been with the Company in that capacity since January
1996.
The decision whether to fill the vacancy created by Mr.
Brodsky's departure is under consideration.
Orange and Rockland serves an area of 1,350 square miles and
an estimated population of 671,000 in southeastern New York
State, northern New Jersey and northeastern Pennsylvania. It
generates, distributes and sells electricity, and distributes and
sells natural gas.
